Auto insurance review may bring relief for premium pain
Drivers in Newfoundland and Labrador who are feeling the pain of high insurance premiums were given some reason for hope Tuesday.
The provincial government released the terms of reference for a long awaited review of the auto insurance system, and that's especially welcome for those in the taxi industry.
"We as an industry have been waiting for this well over four years," NL Taxi Owners Alliance spokesman Doug McCarthy said following an announcement at Confederation Building.
The review will be carried out by the Public Utilities Board, while Service NL will also examine ways to improve highway safety, and look at ways to bring more competition to an insurance market that is dominated by three or four brokers.
The timeframe is ambitious, with the government hoping to implement changes by the fall of 2018.
Taxes adding to the pain
Motorists have long complained about insurance rates. And things only got worse last year when the new Liberal government, faced with a fiscal tsunami, slapped a 15 per cent sales tax on premiums.
Information released Wednesday shows that drivers in this province pay an average of $1,100 annually in auto insurance premiums, compared to less than $800 paid by drivers in other Atlantic provinces.
Those figures do not include taxes.
Why such a disparity?
Is it our bad driving?
The absence of a cap on soft tissue injury claims?
Or maybe our higher rates of drunk driving?
The government is asking the public utilities board to find out, and attempt to bring rates more in line with our Atlantic neighbours.
"It would be premature for me to judge the reason why," said Joyce.
"We just know that they're up and the public wants some answers."
The situation is especially dire for those in the taxi industry, whose rates have skyrocketed over the past four years.
"We are looking at rates right now that are driving us out of business faster than we can pick up customers … we are at the point now that if something drastic doesn't happen that by 2018 there will be no taxis in the province of Newfoundland and Labrador," said McCarthy.
Top-to-bottom review
Faced with growing calls for action, the province announced the review in July, and followed that up with a terms of reference on Tuesday.
The PUB will do a top-to-bottom examination of the system, including separate studies of completed insurance claims for private passenger vehicles and taxis.
It's hoped this study will shed some light on what's driving up costs in the province.
"We've heard the concerns of the taxi industry about the unsustainable burden of high insurance premiums," said Bernard Davis, parliamentary secretary to the minister of Service NL.
A review of the existing private passenger insurance products offered in the province will be done as well.
Profits in the insurance industry will also be scrutinized, but a spokesman for the industry denied that companies are taking advantage of customers.
"I don't think they're gouging people in Newfoundland at all," said Jason Sharpe of the province's Insurance Brokers Association. "I just think the product itself needs to be reviewed and hopefully we can get to the bottom of it."
The province wants recommendations on how to reduce claim costs and premiums, including the possibility of capping payouts for minor injuries. Unlike many other provinces, there are no caps on claims for non-economic loss for minor injuries, but there is a deductible of $2,500.
"We're looking forward to some concrete steps that we can move forward to decrease the cost of insurance in the province," said Municipal Affairs Minister Eddie Joyce, who helped lay the groundwork for the review during his time as Service NL minister.
