Newfoundland auto insurance plan includes optional coverage and rate freeze

New changes to Newfoundland’s auto insurance system announced today include optional coverage for minor pain and suffering, and a rate freeze.Following on the heels of other Atlantic provinces introducing changes to tackle rising auto insurance rates, Newfoundland has released a reform package that includes a 12-month freeze on rates.The package would also mean that the right to compensation for minor “pain and suffering” (i.e. for injuries that are not permanent or serious in nature) would become an optional cover, which the government says will result in a 30% rate reduction for those who opt-out of the cover. For those who keep the coverage, the government says that coverage must be given at the same rate for the next 12 months.New underwriting rules have also been introduced, including a ban on underwriting based on age, marital status, gender or any other factors except driving record. The government says this could lead to a 60% reduction in rates for young drivers, seniors and others. Insurers are also banned from increasing rates as a result of not-at-fault claims, NSF cheques or lapse in coverage.”Consumers have also told us that insurance companies have not been treating them fairly,” says Premier Grimes. “To ensure that all consumers are treated fairly, government will regulate the guidelines insurers use to determine insurability and rates.”The government is also removing the minimum insurance rates set by the province’s Public Utilities Board (PUB), and is placing the collection of insurance statistics with the PUB, rather than the Insurance Superintendent.The rules would increase the minimum capital requirements for new insurers in the province from $1 million to $3 million. And it requires all other insurers to pay full compensation for unearned premiums in the event another insurer becomes insolvent. Currently, the Property & Casualty Insurance Compensation Corporation (PACICC) pays a portion of the unearned premium, but not the full 100%.