Capping claims won't lower your insurance bill, says industry exec

A lawyer advocating against a cap for minor injury claims asks why it would be needed if it won't reduce auto insurance rates.

Lawyer with Insult to Injury group asks why a cap is needed if it won't lower rates

Car insurance rates have been rising in Newfoundland and Labrador, and the PUB is currently reviewing the industry for the first time in 14 years. (CBC)

A cap on claims for minor injuries from car accidents is not going to bring down insurance rates, at least in the short term, says one insurance company executive. 

"The cap allows us to better stabilize premiums in the province. We can implement better cost-management controls," Natalie Higgins of Intact Insurance told the St. John's Morning Show Friday. 

That contradicts what the insurance industry has said when advocating for the province to limit claims for pain and suffering, said a lawyer involved with the Insult to Injury campaign against a cap.

"[Higgins] is telling us now that even if you put in a cap it's not going to lower our rate, so what is it achieving?" asked Valerie Hynes, a partner at Roebothan Mckay Marshall.

"A cap is not going to stop one accident from happening. It's just going to take compensation from the victim of that collision."

The Public Utilities Board and Service NL began a review of the province's auto insurance industry on April 9, marking the first official examination of provincial rates since 2005.

The review came in response to complaints about the high cost of vehicle insurance in the province. As part of the review process, Impact submitted its report to the PUB ahead of the Easter long weekend.

Minor injury cap doesn't remove right to sue

During the review process, the idea of a cap on claims for minor injuries has been a major topic of discussion  — and some controversy.

"I think one of the things that we've heard loud and clear from the public in Newfoundland and Labrador is that they want to retain the right to sue. This is very important to people in the province," Higgins said. 

"And with the implementation of a minor injury cap, we would like to confirm that that in no way impacts or limits the ability to sue."

Putting a cap on minor injury claims from auto accidents may help stabilize insurance rates in N.L., said Natalie Higgins of Intact Insurance, but in the short term likely won't lower them. (Paula Gale/CBC)

A minor injury cap would also only apply to awards for pain and suffering, Higgins said, and not to claims for rehabilitation, loss of income, or the need to hire paid help.

The Nova Scotia example

Higgins said the 2003 introduction of a minor injury cap and an evidence-based treatment protocol in Nova Scotia have helped control insurance costs in that province.

The changes help people recover faster, she said, because they're being treated immediately.

In Newfoundland and Labrador, people are sometimes going up to two years post-accident to receive treatment for injuries and make a claim. 

"Unfortunately, what we know is that when time passes and an injury is not dealt with or appropriately cared for, it exacerbates the cost," she said.

Valerie Hynes is a St. John's lawyer whose firm represents many clients who have been injured in vehicle accidents. (Peter Cowan/CBC)

But the justification for a cap in Nova Scotia was that it would reduce insurance costs, Hynes said.

"If it won't reduce costs in Newfoundland and Labrador then it is arbitrarily capping awards for pain and suffering, which can impact a person's life significantly, without achieving its intended goal."

The impact of tech, good and bad

Technology has made its impact on the industry as well, both good and bad.

A mobile app, or a dongle that fits into the car's steering column, can track driving behaviours regarding hard braking, rapid acceleration, and time-of-day driving.

Drivers who report good data could qualify for discounted insurance rates. Intact customers in other jurisdictions get a rate discount off the top when they sign up for such programs, and can qualify for up to 25 per cent off their insurance rate based on their driving information.

On the other hand, the increased use of computerized components in cars has made even minor accidents more expensive for insurers, with the cost of repairing a vehicle higher than it was even five or six years ago, Higgins said.

"A bumper we could have replaced years ago for seven, eight hundred dollars, today that same bumper is costing us four or five thousand dollars because of all of the sensors, and the backup cameras and all the additional technology that's now being built into those vehicles."

But these are concerns that relate to property damage, not personal injuries, and are therefore unrelated to a cap on minor injury claims, Hynes said.

"In the short term, in the medium term, in the long term, nothing about this cap is contributing to bringing down rates."

With files from the St. John's Morning Show and Peter Cowan