The Facts

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The insurance industry is asking our government to take away your right to fair compensation if you get injured in a traffic accident. Big insurance says it’s suffering because accidents and injury claims here are rising.

The facts tell a different story. Accidents have actually declined in Newfoundland and Labrador—while drivers here have overpaid premiums, helping boost huge corporate insurance profits.

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About the insurance industry

A few big national and multinational companies control most insurance sold in our province. None of these companies are located in NL. The insurance agents you deal with are brokers; they sell you policies from big companies located in major centres in Canada or worldwide.

Declining accident rates in NL

The insurance industry says accident claims are up and that’s hurting their business. But accidents have actually declined steadily in our province in recent years, reports the Royal Newfoundland Constabulary (RNC). In fact, accidents involving property damage declined 25%.

Source: RNC data on motor vehicle accidents involving property damage.

Truth about rising insurance premiums

The insurance company says escalating personal injuries are what’s driving up auto insurance premiums. But that claim doesn’t add up.

Here’s why:

  • There are different components to auto insurance. The one most affected by injury claims is called “third-party liability.” So, if injuries were causing the overall increase in premiums, that’s the portion we’d see going up.
  • The premiums charged for third-party liability have stayed relatively flat for the past decade—because the average cost to insurance companies for injury losses and expenses has been stable since 2001.
  • In Newfoundland and Labrador, insurance companies have benefitted as their payouts for third-party liability declined in recent years—while rising slightly in other provinces.

NL drivers have overpaid premiums

An independent study by economists at York University shows Newfoundland and Labrador drivers overpaid premiums by as much as $92 million dollars between 2011–2016.

Using the insurance industry’s own information, they conducted a financial review of the insurers who represent most of the policies sold in this province. The researchers discovered that big corporate insurers earned, on average, a 19% profit from auto policies sold in NL. That’s more than three times the accepted fair rate of return (6%).

Those profits left our provincial economy for corporate headquarters in big cities like Toronto, New York and London.

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Big insurance, huge profits

A cap won’t lower premiums much

The insurance industry says a cap on injury payouts could lower our premiums. But if it does, it’s likely to be a small monthly amount, enough to cover a deluxe car wash, maybe … or a fast food lunch.

In Nova Scotia, New Brunswick and PEI, where accident victims have had their compensation capped, drivers pay about $3.85/week less in premiums than we do in NL.

Is saving the equivalent of a medium coffee and a donut really worth giving up the right to fair compensation if you, or a loved one, are hurt in an accident?

And if you don’t own a vehicle … you’d still lose your rights under a cap. It will apply to passengers, pedestrians and cyclists—anyone hurt in a motor vehicle accident.

A cap on compensation is designed to protect big insurance companies. It will also protect drivers, including distracted and impaired drivers, who cause accidents.

Meet some real victims who found out how high the cost of such small savings.

Meet Some Real Victims