February 16, 2007
Province Recognized for One of the Lowest Auto Insurance Premiums in the Country
Newfoundland and Labrador has one of the lowest average premiums for auto insurance. This is consistent with the Williams Government Blueprint commitment to lower auto insurance rates when it took office in 2003. The Honourable Dianne Whalen, Minister of Government Services, says that she was extremely pleased with the recognition that this province has the third lowest auto insurance premium in the country and one of the largest decreases in rates as well. This was published in the report, The False Promise of Government Auto Insurance, by the Fraser Institute which was released yesterday.
"Auto insurance reform was a key platform for this Provincial Government. We heard over and over from consumers that their premiums were too high and we listened to them," said Minister Whalen. "We asked the Public Utilities Board to review auto insurance rates and saw significant reforms introduced in 2004 and 2005. These reforms resulted in consumers saving up to 20 per cent. The Fraser Institute�s report reaffirms that our reforms were in the best interest of consumers. It is rewarding when we see that consumers in this province are paying on average $947 as compared to almost $1,500 in other provinces."
Key reforms introduced in 2004 provided consumers with an average overall savings of 15 per cent on their premiums, depending on their coverage and where in the province they live without significantly reducing benefits to injured parties. The reforms included a $2,500 deductible on pain and suffering claims. In 2005, government introduced further reforms to include an additional five per cent reduction in premiums and the elimination of rating based on age, gender and marital status. Additional reforms included regulations of underwriting guidelines, 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.
In addition, the participation rate for Facility Association has gone down from a peak of eight per cent in September 2003 to a current rate of less than three per cent. Facility Association is an association funded by all automobile insurers in each of the jurisdictions in which it operates. It ensures that drivers unable to obtain insurance with an individual company are able to obtain the coverage they need to legally operate their vehicles. This decline means some 10,000 Newfoundlanders and Labradorians have been able to obtain insurance in the regular marketplace representing a significant reduction in their premiums.
"Since we first introduced these reforms, we have heard from many consumers who have been pleased with the reductions they have seen in their premiums," said Minister Whalen. "Insurance is an issue which we took seriously and it is always rewarding when we hear that consumers feel that they are being treated fairer."
Government continues to take steps in this area. To that end, the department recently released the Principles for the Sale of Insurance which aims to educate consumers about their options. Insurance companies and brokers are obliged to provide this consumer protection document to consumers so that they can make informed decisions about their insurance purchase.
This consumer protection document was a result of the Public Utilities Report on homeowner, marine and commercial insurance. The Department of Government Services is currently working with a number of groups including the volunteer sector and the insurance industry to determine next steps government should take to address concerns in those areas.
- 30 -
BACKGROUNDERGovernment legislated additional auto insurance reform measures as of August 1, 2005, based on the outcome of the Public Utilities Board (PUB) review and the department's own review of several issues that were in addition to that process.
mandated five per cent reduction of premiums, unless insurance companies can actuarially justify to the PUB on an individual basis that they can't absorb it;
These changes are in addition to the auto insurance reforms that came into effect August 1, 2004 that provided consumers with overall average savings of 15 per cent on premiums.
Auto insurance was a key platform in the 2003 provincial election. Shortly after taking office, this government unveiled a comprehensive plan for reviewing and reforming auto insurance in the province. The plan included:
2007 02 16 10:10 a.m.
All material copyright the Government of Newfoundland and Labrador. No unauthorized copying or redeployment permitted. The Government assumes no responsibility for the accuracy of any material deployed on an unauthorized server.