Newfoundland Auto Reform Includes Rate Freeze

Featured among reform changes to Newfoundland’s auto insurance system is optional coverage for minor pain and suffering, as well as a rate freeze imposed on insurers. This follows on the heels of the other Atlantic provinces in introducing changes to tackle rising auto insurance rates. The rate freeze presented in the Newfoundland package is for a period of 12 months.

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 optional cover, which the provincial government believes will result in a 30% rate reduction for those who opt-out of the cover. For those who keep the coverage, the government says the cover must be made available 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.

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 will require all insurers to pay full compensation for unearned premiums in the event another insurer becomes insolvent.