Cap no solution: con­sumer ad­vo­cate

Den­nis Browne says in PUB submission that in­creased de­ductible a bet­ter way to tackle is­sue

The Packet (Clarenville) - - Front page - BY GLEN WHIFFEN glen.whiffen@thetele­

The province’s con­sumer ad­vo­cate says he is against a cap be­ing im­posed on com­pen­sa­tion for mi­nor in­juries sus­tained in au­to­mo­bile ac­ci­dents in the province be­cause he be­lieves there will be very lit­tle change to in­surance rates for con­sumers, and it will im­pede vic­tims’ rights to ac­cess the court sys­tem.

He is, how­ever, sug­gest­ing an in­creased de­ductible.

Den­nis Browne, in his submission to the Pub­lic Util­i­ties Board (PUB) in re­la­tion to the PUB’s re­view into au­to­mo­bile in­surance in New­found­land and Labrador, said that af­ter con­sid­er­ing all the ev­i­dence pre­sented dur­ing the PUB’s hear­ings, it is dif­fi­cult to con­clude that the in­tro­duc­tion of a cap would be an im­prove­ment or trans­late into long-term, sta­ble rates for con­sumers.

“A cap in other ju­ris­dic­tions has re­sulted in lit­i­ga­tion to de­ter­mine if a claimant falls within the leg­isla­tive def­i­ni­tion of ‘mi­nor in­jury’ which would be sub­ject to the cap,” the submission states.

“This could prove an ex­pen­sive proposition for con­sumers. Cur­rently our courts de­ter­mine the value of claims, rather than pre-de­ter­mined leg­isla­tive def­i­ni­tions. Con­sumers should main­tain their right to ac­cess the court sys­tem un­en­cum­bered.

The im­po­si­tion of caps will im­pact ad­versely on con­sumers gen­er­ally.”

The PUB was asked by the pro­vin­cial gov­ern­ment to re­view and re­port on a num­ber of is­sues with re­spect to au­to­mo­bile in­surance in the province, in­clud­ing the rea­sons be­hind in­creas­ing claims costs for pri­vate pas­sen­ger ve­hi­cles and taxi op­er­a­tors, and op­tions to re­duce the costs.

The PUB was specif­i­cally asked to ex­am­ine the im­pact on rates and im­pli­ca­tions for claimants of in­tro­duc­ing a mone­tary cap on claims for non-eco­nomic loss for mi­nor/ mild in­juries or con­tin­u­ing with the cur­rent de­ductible of $2,500, or in­creas­ing the de­ductible.

The In­surance Bureau of Canada (IBC), the na­tional trade as­so­ci­a­tion that rep­re­sents 90 per cent of Canada’s prop­erty and ca­su­alty in­sur­ers, has stated that in­sur­ers in New­found­land and Labrador are los­ing money be­cause claims costs are es­ca­lat­ing.

Re­forms the IBC are propos­ing to help sta­bi­lize the auto in­surance in­dus­try in the province in­clude re­plac­ing the ex­ist­ing $2,500 de­ductible with a $5,000 com­pen­sa­tion cap on mi­nor in­juries.

Browne notes in his submission there is vary­ing ev­i­dence con­cern­ing the prof­itabil­ity of the in­surance in­dus­try in this province and its long-term sustainability.

“On bal­ance af­ter con­sid­er­ing all of the ev­i­dence, it is in the best in­ter­ests of con­sumers at this junc­ture to con­tinue with a de­ductible regime, but one which will en­sure re­duced and sus­tain­able pre­mi­ums,” Browne sug­gests. “A change to the leg­is­la­tion ... with an in­crease in the de­ductible of up to $10,000 is there­fore rec­om­mended.

“This sub­stan­tial de­ductible would be more dif­fi­cult to dis­re­gard and could serve to bal­ance the in­ter­ests of in­sur­ers and con­sumers, pro­vided that the in­sur­ers are com­mit­ted to pre­mium re­duc­tion and longterm pre­mium sta­bil­ity.

“There is ev­i­dence a de­ductible of $7,500, could re­sult in pre­mium sav­ings of $45. A de­ductible of $10,000, could re­sult in pre­mium sav­ings of $65. These sav­ings are not im­pres­sive. The in­dus­try must of­fer bet­ter.

Fur­ther­more, the de­ductible may be op­tional. For those con­sumers who do not want to opt into the leg­is­lated de­ductible, the in­dus­try can of­fer the pur­chase of an ap­pro­pri­ate pol­icy.” Other rec­om­men­da­tions Browne’s submission also dis­cusses and makes rec­om­men­da­tions on a num­ber of other ar­eas cov­ered by the PUB’s re­view.

They in­clude: the causes of poor claims ex­pe­ri­ence for taxi driv­ers and op­er­a­tors - in­clud­ing de­tails re­gard­ing the un­der­ly­ing causes of loss and high claim costs in­curred; the prob­lem of unin­sured driv­ers; high­way safety and ac­ci­dent preven­tion; law en­force­ment ef­forts; and ed­u­ca­tion and aware­ness.

“In this submission rate de­sign and caps on com­pen­sa­tion and the fo­cus on re­duc­ing the fre­quency and sever­ity of ac­ci­dents have been ex­am­ined,” Browne noted.

“Our roads can be safer. This can be achieved by more ro­bust en­force­ment and co-or­di­na­tion of key play­ers. The taxi ex­pe­ri­ence in this province can be im­proved by in­sti­tut­ing driver mon­i­tor­ing, en­force­ment of Ser­vice NL taxi-re­lated mea­sures taken in 2018, and by hav­ing Fa­cil­ity As­so­ci­a­tion re­ex­am­ine their rat­ing ap­proach. In­sur­ers have a role to play by im­ple­ment­ing var­i­ous meth­ods of ve­hi­cle data mon­i­tor­ing for taxis and pri­vate pas­sen­ger ve­hi­cles.

“This submission deals with the in­surance prod­uct, and that it may be im­proved by in­creas­ing the ex­ist­ing de­ductible for in­jury claims, mak­ing ac­ci­dent ben­e­fits manda­tory with en­hanced med­i­cal and re­ha­bil­i­ta­tion ben­e­fits, the es­tab­lish­ment of pre-approved ev­i­dence­based treat­ment pro­to­cols and in­sti­tut­ing di­rect com­pen­sa­tion for prop­erty dam­age.”

Brown also stated that the high num­ber of unin­sured driv­ers on the roads can be re­duced by as­sign­ing li­cence plates to in­di­vid­u­als, and cre­at­ing a mech­a­nism for bet­ter com­mu­ni­ca­tion/no­ti­fi­ca­tion as be­tween in­sur­ers and the Mo­tor Ve­hi­cle Reg­istry.

The PUB’s fi­nal re­port to the pro­vin­cial gov­ern­ment is ex­pected some­time this fall.


New­found­land and Labrador con­sumer ad­vo­cate Den­nis Browne.

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