The Insurance Bureau of Canada gave cautious approval to measures proposed by the government of Prince Edward Island (PEI) to address rising auto insurance claims costs, calling them a “positive step forward.”
The IBC warned, however, that “a proposal to increase regulation of the industry will tend to drive up the cost of insurance for consumers.”
The PEI government plan includes a proposal that would cap non-economic losses at C$2,500 (U.S.$1815). The IBC noted that “a similar measure was introduced in New Brunswick where insurers have responded by applying for and using lower rates for consumers.”
“The only way Islanders are going to benefit from lower premiums is by addressing rising claims costs,” stated Don Forgeron, VP of IBC Atlantic region. “Clearly, we’re pleased that the government recognizes that. However, we would urge the government to reconsider introducing a bill that would impose more regulation on the insurance industry.”
Forgeron stressed that “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.
“It’s really no coincidence that up until now Islanders have enjoyed the lowest premiums in the country and the least amount of regulation,” he added.
“The IBC remains encouraged by the government’s initial steps and looks forward to working together towards implementing lasting reforms to PEI’s auto insurance system,” the bulletin concluded.
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