New Brunswick legislation a positive step towards stabilizing insurance premiums - IBC

June 16, 2003 FREDERICTON - Automobile insurance awards for pain and suffering as a result of minor personal injuries sustained in an accident on or after July 1, 2003 will be capped at $2,500, Justice Minister Bradley Green announced today.

"The cap is part of government's comprehensive plan to reduce auto insurance rates and provide New Brunswick consumers with the insurance they need at a cost they can afford," Green said. "Minor personal injury claims have driven up costs and are part of the problem of increasing automobile insurance premiums. Capping these claims will help to bring rates down."

No one who is seriously injured will be affected by the new regulation under the Insurance Act, as the caps focus on minor personal injuries only. Also, those who suffer minor injuries affected by the cap will still be able to recover 100 per cent of any economic losses, such as lost wages. Accident victims also retain the right to recover economic and non-economic damages for serious and permanent injuries though legal action.

"This new regulation will lead to lower auto insurance premiums for New Brunswick consumers. It is a key component of our strategy to bring fairness, affordability and accessibility to automobile insurance," Green said. "We expect insurance companies to file new, lower rates as of July 1 with the Public Utilities Board. The Public Utilities Board will investigate all of these new rates to ensure they are fair and reasonable. Any rates that are deemed excessive will be lowered."

The cap is the latest step in the government's reform plan for auto insurance rates and follows implementation of regulations to the Insurance Act which prohibited insurers from discriminating against New Brunswickers for a variety of reasons, including age of a person or age of a vehicle. New rules are also in place which force insurance companies to justify any increase of more than three per cent in a 12-month period in a public hearing before the Public Utilities Board.

"We are taking a comprehensive approach to lowering unacceptable automobile insurance rates and making auto insurance more fair and accessible to all New Brunswick drivers," Green said.

FREDERICTON, NB, June 17 /CNW/ - Insurance Bureau of Canada (IBC) is pleased that New Brunswick's government is taking concrete action to stabilize auto insurance rates. Bradley Green, Minister responsible for insurance, announced yesterday that pain and suffering awards for minor personal injuries would be capped at $2,500 as of July 1st. This applies to awards that are over and above insurers' pay-outs for healthcare and auto repair costs.

"The industry is optimistic that this new legislation will control escalating claims costs," said Don Forgeron, Vice President of Insurance Bureau of Canada's (IBC) Atlantic region. In New Brunswick, claims costs for automobile insurance have outpaced premiums by six to one since 1996, primarily due to escalating awards for pain and suffering. Based on a recent review of IBC's database of 120 million insurance policies, New Brunswick premiums increased 20% from 2001-2002. The government reported yesterday that this new legislation would limit compensation for minor soft tissue injuries, while ensuring maximum benefits for those who are seriously injured.

"We have been working towards a solution that includes restricting minor, non-permanent injury claims so that those who are seriously injured can receive the care they need and deserve," said Forgeron. "This legislation will combat the costly awards that now accompany every accident. It's encouraging that the government is taking the necessary steps to target the root cause of increasing premiums."

Insurance Bureau of Canada is the national trade association of the private property and casualty insurance industry. It represents more than 90 % of the non-government home, car and business insurance in Canada. Visit the media section of IBC's web site at www.ibc.ca for more news releases and information.