PEI adds “pain and suffering” cap, but proposes stricter regulation

Reacting to news that the government of Prince Edward Island intends to join other province’s in implementing a $2,500 cap on “pain and suffering” awards for auto accident victims, insurers are holding back on the celebration. While the cap is good news, PEI is also looking at stricter regulation of auto insurers, which the Insurance Bureau of Canada (IBC) says could drive up costs.”The only way Islanders are going to benefit from lower premiums is by addressing rising claims costs,” says IBC Atlantic region vice president Don Forgeron, of the cap on non-economic awards. “Clearly, we’re pleased that the government recognizes that.” But he was less than pleased with the government’s plan to change to regulation of insurance. Premier Pat Binns’ plan calls for the Island Regulatory and Appeals Commission to have full authority over insurance rates.”More regulation does nothing to address the core issue of rising claims costs. In fact, increasing the regulatory burden on an already over-regulated industry is only going to add costs for consumers,” Forgeron says. “It’s really no coincidence that up until now Islanders have enjoyed the lowest premiums in the country and the least amount of regulation.”The PEI government has indicated it expects insurers to file new, lower rates with the appeals commission by October 15, and that it expects those rates to take drivers back to pre-2002 levels.Other facets of the “five point strategy” include reducing the limitation period on claims, promoting road safety and developing common regulatory approaches with other Maritime provinces via the Atlantic Insurance Task Force. The report of that task force is expected at the end of September.In releasing the strategy, Premier Binns says, “many consumers have told us that they have experienced unacceptable automobile insurance rate increases. This has caused hardships for some individuals, families and small businesses.”