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Government Services Minister Dianne Whalen

 Speaking Notes: Auto Insurance Reform
News Conference � May 12, 2005
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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.
     

  • First I want to introduce the Superintendent of Insurance and assistant deputy minister for Consumer and Commercial Affairs, Winston Morris.
     

  • 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.
     

  • I am pleased to be able to say today that we have delivered on that plan.
     

  • 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.
     

  • 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.
     

  • 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.
     

  • 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.
     

  • 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.
     

  • 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.
     

  • 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.
     

  • This additional savings can be credited on your next policy renewal, or refunded upon cancellation of the policy.
     

  • 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.
     

  • 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.
     

  • A third of all consumer comments during the review process pertained to this issue.
     

  • 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.
     

  • 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.
     

  • At the same time, we are permitting companies to continue to offer seniors� discounts.
     

  • 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.
     

  • Insurance companies will now have to complete a Point of Claims Disclosure form to be signed by the claimant when making a claim.
     

  • This form will ensure that claimants know that under federal law, insurance companies can place them under surveillance without their knowledge or consent.
     

  • This balances privacy concerns without defeating the purpose of surveillance.
     

  • 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.
     

  • 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.
     

  • 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.
     

  • 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.
     

  • This is what we set out to achieve with the review, and this is exactly what we have achieved with our reforms.
     

    • Last August we implemented a 2,500-dollar deductible.
       

    • At the same time, we ensured that the Terms of Reference for the Public Utilities Board review included a cap versus a deductible.
       

    • 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.
       

    • We have achieved an average overall savings of 20 per cent, significantly more for young drivers, while still retaining that access to compensation.
       

    • We believe this is in the best interest of consumers, and that it is what consumers want.
       

    • 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.
       

    • 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.
       

    • We are legislating these reforms in the best interest of consumers in this province. Thank you.


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