Consultants hired by the Nova Scotia government are recommending relatively tiny and timid changes to auto insurance including slightly higher payouts for those injured or killed in car crashes and reforms designed to ensure accident victims get slightly better treatment for so-called “minor” injuries. The auto insurance review was commissioned by the province last November. It was led by Ron L’Esperance, a retired civil servant who now works for a Halifax consulting firm.
In their report released today, the consultants note that Nova Scotia and PEI have the stingiest accident benefits in the country. For example, under the standard NS insurance policy, someone who is totally disabled because of a a car accident is eligible for only $140 per week in disability benefits — an amount that hasn’t changed since 1974. The report recommends that such disability benefits rise to $250 per week. However, that amount would need to rise to $660.31 a week in 2011 dollars just to keep pace with those 1974 levels according to the Bank of Canada inflation calculator. Disability benefits vary widely by province. If Nova Scotia implements the consultants’ recommendation, benefits would reach a maximum of $13,000 per year. By contrast, Saskatchewan, which has a similar-sized population to Nova Scotia’s, already allows people disabled in auto accidents to receive 90 percent of net wages based on a gross annual income of up to $67,762. Saskatchewan has public auto insurance.
Other recommendations include doubling medical rehabilitation benefits from $25,000 to $50,000 along with a substantial increase in death benefits —- changes that would provide significantly less in benefits to Nova Scotians than what provinces with public auto insurance already offer. (For example, in Manitoba, there are no limits on medical payments including rehabilitation.)
The report also outlines other options that would allow consumers to pay lower premiums for lower benefits. But whichever option the province chooses, the report recommends that benefits be reviewed every three years or indexed to inflation. It also urges the province to study the options carefully to minimize the impact on insurance rates.
“Minor” injuries
The report notes that last year the government increased the cap on pain and suffering awards from $2,500 to $7,500 for so-called minor injuries even though in opposition, the NDP had promised to get rid of the cap altogether. The government also changed the definition of minor injury to strains, sprains and disorders associated with whiplash — all of which are the most common auto injuries.
Today’s report recommends that the province adopt standards already in place in Alberta to ensure victims get speedier treatment from a range of professionals including doctors, physiotherapists and chiropractors. It also suggests the province adopt Alberta’s requirement that insurance companies pay for the treatment up front without requiring accident victims to cover the costs out of pocket and then get reimbursed later.
The report says Nova Scotians should be given the choice to pay higher premiums if they want the right to sue for amounts higher than the $7,500 cap.
It recommends that the province make it harder for drivers to cancel their insurance once they’ve registered their vehicles and/or renewed their licences. It suggests the government study ways of tapping into company computers to ensure that policies are kept up-to-date. It also calls on the province to discourage insurance fraud partly by amending regulations so that making fraudulent insurance claims is specifically recognized as distinct from other forms of fraud.
No to “pay-as-you-go”
While the report does not recommend the adoption of “pay-as-you-go” insurance under which drivers pay less if they drive less, it does urge the Superintendent of Insurance to monitor it. About 35 states in the US have some form of pay-as-you-go and it has also been introduced in other countries such as the United Kingdom and Australia.
On two other touchy issues, the report takes a cautious approach. It notes the province has a number of procedures in place to monitor elderly drivers who may pose a risk on the road, but suggests increased vigilance. And, although it does not recommend an outright ban on allowing insurance companies to discriminate on the basis of sex in setting insurance rates, it suggests the practice is becoming socially unacceptable. British Columbia, Saskatchewan, Newfoundland and Labrador and New Brunswick prohibit insurance companies from discriminating on the basis of sex. Ending that practice here could lead, the report notes, to younger women facing an increase in premiums of up to 15 percent.
The report calls for a bigger investment in public education using plain language so that consumers can better understand auto insurance.
Finally, the report says nothing about public auto insurance. Last year, the government made it clear it has abandoned its former promise to bring in a publicly run scheme even though while in opposition, the NDP argued that public insurance would mean lower premiums and better benefits.
This article appears in Jun 2-8, 2011.
Was in an accident in 2000 involving injuries, 100% the fault of the other driver. Never in my life would I ever want to have to deal with another insurance company again, except pay my premiums. If I had to go through another one, I would phone a lawyer before I phoned an ambulance.
Unbelievable how the insurance company employees will lie, right to your face.
Forcing the insurance companies to pay up front is a good start, the last thing you should have to worry about is money.
Regarding the article, how much more will I have to pay for these ‘key changes’?
Informative! I did not know that if I were totally disabled in an accident, all the insurance company would have to pay is $140/week. To put it in perspective, that is less than your grocery bill, child care, less than rent/morgage, even people daily smoking habits. I see nothing wrong with having that amount follow inflation. $140 in 1974 was worth something.
I agree with getting rid of the sex-based premiums, if they charge females less, the difference must lie on the males premiums. Making it equal should increase the ladies premiums and lower the mens. Pay as you go could be interesting, not sure how they’d implement this, likely at renewal the agent would check out the odometer reading.
I don’t think I agree with paying more in premiums IN CASE I get into an accident so that I can try to sue a large corporation for more money. The suits usually have deep pockets, probably would benefit many people.
Hey Bundy, The pay-as-you-go section of the insurance review report says on page 56: “In the US, pay as you go insurance has been most prominently marketed by Progressive – their Snapshot Product which uses a device plugged into the automobile, and GMAC, using its telemetric On Star system. Aviva piloted this product in Canada some years ago, apparently with little consumer interest. One of the factors that may be limiting interest in this product relates to privacy concerns. One insurer, with knowledge of this product, referred to it as “having a bit of a big brother feel to it that likely turns off some customers”.”
Of course, the tracking could be done, as you suggest, using odometer readings. The report says other factors such as where and when you drive could also be used in a pay-as-you-go scheme.
Todd Litman at the Victoria Transport Policy Institute in B.C. has studied what he calls “pay as you drive” or PAYD. His highly informative and readable report can be found at: http://www.vtpi.org/payd_rec.pdf
Finally, the facts book of the Insurance Bureau of Canada contains comparative information on auto accident coverage by province starting at page 23 (Appendix C) of this report. Read it and weep: http://www.ibc.ca/en/Need_More_Info/docume…
Thanks Bruce. So to have this PAYG, I’d have to subscribe to Onstar (or something similar)? That cost would have to be considered, if OS is $30/mth, then your premiums would have to be at least $360 less to make PAYG worthwhile to consumers (assuming I’d bear the cost of OS). A lot of ifs ands buts with this.
I just reread my post, the last line: I meant to write wouldn’t, not would.
I sure hope that these changes wont effect my Alberta car insurance. It took me months before I chose a policy, now I have to worry about it changing on me. I sure hope they are very “timid” and minor changes. I guess I’ll have to call http://cansurance.ca and see what’s going to happen.
sleezebags! all agents ,lawyers and “independent ” medical examiners working for insurance companies are the lowest of the low. Even faced with overwhelming evidence of injury all they do is deny,deny,deny. They refuse to pay medical expenses until the whole case is resolved even though their client was 100% in the wrong. And our government lets them away with it. Much of the cost of personal injury is downloaded to the provincial health care system.
People reading about “large settlements” are probably not aware of the costs associated with “winning”. Typically ,expert witnesses, etc. can cost 30-40,000 dollars.So take an award of $300,000. Sounds big. The court will discount this at 40% leaving $180,000 . Less $40,000 leaves $140,000 and then your contingency lawyer takes 40% leaving $84,000. Not so big when you’re now saddled with a lifetime of medical bills and pain.
But I do see the politicians point. They would rather ruin the lives of a few than piss off a lot of voters by keeping the insurance rates as low as possible. But in the end everyone pays because of the dirty little secret of these costs being downloaded to the public health care system.