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Good morning and thank you
for coming out this morning as we outline the additional auto insurance
reform measures we will be bringing into the House of Assembly.
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First I want to introduce
the Superintendent of Insurance and assistant deputy minister for
Consumer and Commercial Affairs, Winston Morris.
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It was 14 months ago that
the Premier and I announced our first series of auto insurance reforms,
and laid out our plan for addressing insurance issues in this province.
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I am pleased to be able to
say today that we have delivered on that plan.
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Our first step on March 17,
2004 was to freeze auto insurance rates for one year, and to direct the
Public Utilities Board to undertake several studies and a public review
process into other possible reform options.
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At that time, we brought
forward a series of initial auto insurance reforms that have provided
consumers with an average overall savings of 15 per cent.
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Consumers are being treated
more fairly as a result of Bill 30 and the new rules on how insurance
companies can set rates and refuse coverage.
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Today I want to outline the
additional reforms we are implementing as a result of the public review
process, and the department�s own review of several related issues.
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I am pleased to announce
that these additional reforms provide a further overall five per cent
reduction in premiums for many drivers, with far greater savings for
young drivers, while still retaining an injured person�s ability to be
compensated.
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This means many consumers
will realize a total average overall savings of 20 per cent on their
auto insurance premiums as a result of the measures taken by this
government since August of last year.
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We are mandating that
companies reduce premiums by a further five per cent as of August 1st,
2005, unless a company can actuarially justify that they can�t afford
it.
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This additional savings can
be credited on your next policy renewal, or refunded upon cancellation
of the policy.
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We are eliminating rating
based on age, gender and marital status. As a result, drivers under 25
will achieve far greater savings, in some cases as much as 46 per cent.
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This is a major issue for
young drivers and their parents. Under existing rates, some young
drivers literally cant afford to drive because of the cost of insurance.
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A third of all consumer
comments during the review process pertained to this issue.
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We agree it isnt fair to the
85 per cent of young drivers who do not have accidents, to have to pay
huge premiums for the 15 per cent who do.
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We are also ensuring that
insurance companies do not raise rates for drivers over the age of 25 as
a result of this measure. Any rate increases will have to be actuarially
justified.
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At the same time, we are
permitting companies to continue to offer seniors� discounts.
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We are putting in place
requirements for insurance companies to follow to ensure consumers are
informed of their rights and responsibilities when they are making a
claim.
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Insurance companies will now
have to complete a Point of Claims Disclosure form to be signed by the
claimant when making a claim.
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This form will ensure that
claimants know that under federal law, insurance companies can place
them under surveillance without their knowledge or consent.
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This balances privacy
concerns without defeating the purpose of surveillance.
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It will also ensure that
anyone making a claim is fully aware that it is a Criminal Code offence
to make a false claim or to inflate a claim, and that they can be
prosecuted.
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We are also now moving to
permit group rating, which will provide lower rates of between five and
15 per cent to members of qualifying identified groups, such as unions
and alumni associations.
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Finally, the legislation we
are bringing forward also gives affect to the new rate setting process
we announced in March. This process is based on individual company
filings where each company must justify any rate increases to the Public
Utilities Board.
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As a government, we mandate
people to carry insurance and therefore it is incumbent upon us to
ensure consumers are treated fairly, and that they have access to
coverage at reasonable rates.
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This is what we set out to
achieve with the review, and this is exactly what we have achieved with
our reforms.
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Last August we
implemented a 2,500-dollar deductible.
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At the same time, we
ensured that the Terms of Reference for the Public Utilities Board
review included a cap versus a deductible.
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The evidence out of that
review supports governments position that the savings from a cap are
not sufficient enough to justify the compensation restriction on
injured parties.
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We have achieved an
average overall savings of 20 per cent, significantly more for young
drivers, while still retaining that access to compensation.
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We believe this is in
the best interest of consumers, and that it is what consumers want.
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We are being reasonable
with these reforms, given the significant profits being reported in
the insurance industry and the room the Public Utilities Board says
exists for rates to come down.
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We understand that not
all companies have the same profit margin, which is why we are
legislating reductions of five per cent, unless a company can go to
the Board and justify otherwise.
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We are legislating these
reforms in the best interest of consumers in this province. Thank
you.