Newfoundland scraps “benchmark” rating

The Newfoundland government says it will stop the “benchmark” system for auto insurance rate-setting in the province and move to individual approval of company rates.

Newfoundland has used a system which set maximum and minimum rates – companies whose rates fell within these benchmarks were automatically approved. With the government-mandated rate freeze set to expire in mid-March, the province says insurers will now have to file rates individually to the province’s Public Utilities Board (PUB) for approval. Government Services Minister Dianne Whalen says the move is intended to increase competition in auto insurance by “permitting companies to charge rates below the benchmarks. We believe consumers will be better served by requiring companies to individually prove to the Public Utilities Board why they need a rate increase. We are committed to protecting consumers from rate increases that insurance companies aren’t prepared to defend.”

Whalen notes that Newfoundland was the only province to use the benchmark system and the new rate-setting process will bring it in line with other jurisdictions. The provincial government intends to bring forward legislation this session, which will be retroactive to March 17 of this year.