by Bruce Wark
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.
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.