August 15, 2017
Provincial Government Finalizes Terms of Reference for Automobile Insurance Review
In the latest step towards modernizing the auto insurance system in Newfoundland and Labrador, the Provincial Government has finalized the terms of reference for the automobile insurance review for Service NL and the Board of Commissioners of Public Utilities (PUB). Government has directed the PUB to begin its review and provide a report on automobile insurance in Newfoundland and Labrador.
The Provincial Government’s terms of reference for the PUB include specific instructions for two phases. Phase one of the review will consist of a closed claims study into private passenger automobile insurance and a separate closed claims study into causes of high taxi claims costs. Phase two will include a review of the existing private passenger automobile insurance products offered in Newfoundland and Labrador, as well as recommendations for possible options to contain costs.
The terms of reference for Service NL cover issues outside the scope of the PUB’s mandate, such as assessing what new regulatory tools or legislative changes would be required to address emerging changes in auto insurance. Service NL’s terms of reference will also include an additional exploration of some matters that will be reviewed by the PUB including examining measures to improve highway safety, a key area of interest as government builds on the momentum from the impaired driving legislation introduced in February 2017.
The terms of reference are included as a backgrounder below.
Although Service NL’s formal consultations will begin after the closed claims studies are complete, individuals wishing to begin sharing feedback are encouraged to email email@example.com. Details on those formal consultations will be announced in the future.
“The automobile insurance review is part of government’s commitment to modernizing the insurance system in Newfoundland and Labrador as set out in The Way Forward. The terms of reference set the scope for the upcoming review, and include the specific issues that Service NL and the PUB will be analyzing. With this step complete, the PUB can now begin work on their independent closed claims studies.”
Honourable Sherry Gambin-Walsh
Minister of Service NL
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Provincial Government Mandates Review of Automobile Insurance: www.gov.nl.ca/releases/2017/servicenl/0704n02.aspx
Insurance Regulation in Newfoundland and Labrador: www.servicenl.gov.nl.ca/insurance/
Automobile Insurance Act: www.assembly.nl.ca/Legislation/sr/statutes/a22.htm
Board of Commissioners of Public Utilities: www.pub.nf.ca/
Terms of Reference for the Board of Commissioners of Public Utilities
The Public Utilities Board shall undertake a review and report on the issues outlined below with respect to Automobile Insurance in the Province and in addition shall detail other issues or concerns raised by stakeholders participating in the review. Certain parts of the review are independent of each other and may be provided to the Department of Service NL upon completion separately.
Phase I of the review will consist of a closed claims study into private passenger automobile insurance and a separate closed claims study into causes of high taxi claims costs. The PUB is directed:
- To conduct a closed claims study to determine the costs associated with Third Party Liability / Section A bodily injury claims arising from the use of private passenger vehicles, including the use (or no use) of interim payments and whether Accident Benefits were available:
- To review the impact on rates of a monetary cap on claims for non-economic loss for minor/mild injuries and the implications of such a cap for claimants:
- To review the impact on rates of continuing with the current deductible of $2,500 or increasing the deductible: and
- To conduct an audit of taxi closed claims to determine the causes of poor claims experience, including details regarding the underlying causes of loss and high claims costs incurred, and provide any recommendations to reduce claims costs and reduce rates.
Phase II will review the existing private passenger automobile insurance products and assess and recommend possible options to contain costs. The PUB is directed:
- To review the auto insurance product offered in Newfoundland and Labrador and conduct a jurisdictional scan of other provinces’ auto insurance product offerings;
- To review the current mandatory Section A/Third Party Liability limit of $200,000 and the rate implications of increasing the limit;
- To review Section B/Accident Benefits coverage and impact on rates with respect to:
- Coverage limits on medical and rehabilitation benefits and indemnity for loss of income;
- Benefit payment practices (i.e. advance payments versus reimbursement);
- Order of payment of benefits in relation to other insurance plans;
- Timeliness and efficiency of the injury assessment process;
- The relationship of Section B benefits to the settlement of Section A benefits; and
- Whether the coverage should be mandatory.
- To review the impact of Newfoundland and Labrador adopting minor injury diagnostic and treatment protocols such as those provided in Alberta and Nova Scotia and how mandatory Section B coverage and the diagnostic protocols would impact Section A claims costs;
- To review the impact of offering direct compensation for physical damage to automobiles (Section C);
- To review Section D Uninsured Automobiles coverage in the Province;
- To report on measures to improve highway safety and automotive accident prevention in Newfoundland and Labrador;
- To review the financial profitability of the auto insurance industry in Newfoundland and Labrador;
- To review the current auto insurance market and provide comment of insurer exits and report on ways to encourage new entrants into the market; and
- To report any other cost savings or other improvements on any aspect of automobile insurance offered in this Province.
Terms of Reference for Service NL
- To gather opinions and evidence on measures to improve highway safety and automotive accident prevention in Newfoundland and Labrador.
- Assess what new regulatory tools or legislative changes would be required to address emerging changes in auto insurance including usage based insurance, telematics or ride sharing type product offerings.
- To review ways to encourage new entrants to the auto insurance market or to encourage increased competition amongst auto insurance companies in the Province.
- To review the issue of vicarious liability and primacy with respect to non-negligent short-term vehicle rental and long term lessors.
- To review and provide any other recommendations on any other aspect of automobile insurance to improve the auto insurance product offered in this Province such as the creation of a risk sharing pool.
2017 08 15 11:10 a.m.