Minister Noel releases consultation paper on automobile insurance reform

Government Services and Lands Minister Walter Noel today released a consultation paper entitled Proposals for Automobile Insurance Reform which contains a comprehensive set of suggested reforms for the automobile insurance industry.

Minister Noel said: "Consumers in our province have sent a clear message to government. They want reduced and stable insurance premiums. This paper is a response to that message."

A key proposal is for a new law which would restrict the right to claim for pain and suffering due to minor injuries which do not result in financial loss. Under such a law, however, claims for financial loss, such as medical fees and loss of income, would still be permitted. Also, where the injury is of a permanent and serious nature, claims for pain and suffering would continue to be paid.

Minister Noel said: "The major cause of increased insurance costs is claims for non-economic loss. Given the choice of higher rates with the right to claim for non-economic loss, or lower rates with significant restrictions on the right to claim for non-economic loss, most consumers may be prepared to choose the option likely to produce lower rates. People have to decide whether they want lower rates likely to benefit many, or retain options to sue likely to benefit few. If such a restriction on pain and suffering claims is put into effect, government would consider mandating an immediate reduction in third-party liability rates, estimated at 35 per cent."

Other key proposals include mandatory accident benefits coverage; changes in procedures for property damage claims; restrictions as to why an insurance company can refuse insurance; and, transparent and timely information to a person holding insurance as to why he or she has been placed into the high risk pool known as Facility Association.

A key consumer protection initiative is a proposal that the Property and Casualty Insurance Compensation Corporation cover 100 per cent of unearned premiums in this province so that consumers do not lose money when an insurance company fails, as happened with Hiland.

There are also a number of other initiatives proposed to deal with uninsured and impaired drivers.

Minister Noel said: "These proposed changes could provide improved insurance coverage where it is most needed, enhance consumer protection, and result in an estimated $32 million per year in net savings to consumers."

Copies of the consultation paper are available on the department's web site at www.gov.nf.va/gsl/consultation or by calling (709) 729-5661.

Written comments on the proposed changes are invited and must be received by the Minister's Office by November 30, 2001. Comments may also be sent by e-mail to autoinsurance@gov.nf.ca

Media contact: Rick Callahan, Director of Communications, (709) 729-4860.

2001 10 04                                   11:45 a.m.