Latest auto insurance reforms proclaimed  

Dianne Whalen, Minister of Government Services, announced today that auto insurance reforms which were introduced in the House of Assembly during the spring session were proclaimed into law as of August 1.  These reforms include an additional five per cent reduction in premiums and the elimination of rating based on age, gender and marital status.  

�I am very proud that government has brought forward these additional reforms, which will be of great benefit to consumers,� said Minister Whalen.  �Since taking office in November 2003, we committed to making changes to the auto insurance industry, and we have delivered on that promise.�  

Consumers will see savings; however, they will not be immediate because insurance companies have until September 1, 2005 to file their rates with the Public Utilities Board.  Where policies in effect on August 1, 2005 were charged a premium based on age, gender or marital status, a refund or adjustment of monthly payments will take place.  For the five per cent reduction in consumers� current premiums, insurance companies may apply this amount to the next policy.  Where consumers do not renew their policies, a refund will be issued at the end of their existing policy.  All refunds/adjustments will be retroactive to August 1, 2005 .  Some companies may be able to justify to the Public Utilities Board that they cannot absorb these decreases.  However, government expects there will be few, if any, in this category.  

Additional reforms being proclaimed today include permitting group rating, a new rate-setting process and a new requirement for insurance companies to complete a Point of Claim Disclosure Form, which ensures that consumers are fully aware of their rights when they are making a claim.  

�Since announcing these additional reforms in May, we have heard from many consumers who are pleased with these initiatives, in particular the reforms affecting young drivers.  This measure could result in large premium decreases for drivers who are under 25 in some cases.  This government believes that all consumers should be treated fairly and be insured at reasonable rates.  What we have proclaimed today will put all consumers on more equal footing with each other,� added Minister Whalen.  

These reforms are based on the outcome of the Public Utilities Board review and the department�s review of several issues that were in addition to that process.  Also taken into consideration was the industry�s ability to operate in a positive business climate.  In recent years, the insurance industry has seen significant profits, and the Public Utilities Board reported that there is 10 to 12 per cent flexibility within the system to reduce rates.   

�It is very important that we find the right balance that protects consumers and does not impede industry.  I believe that we have found a good balance in the initiatives we have put forward,� concluded Minister Whalen.  

Media contact: Vanessa Colman-Sadd, Communications, (709) 729-4860 , 682-6593  

2005 08 02                                                        12:40 p.m.