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The Injury Regulation: Insurance Reform Gone Wrong
The Injury Regulation: Insurance Reform Gone Wrong
The Injury Regulation: Insurance Reform Gone Wrong
The Injury Regulation: Insurance Reform Gone Wrong
The Injury Regulation: Insurance Reform Gone Wrong
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New Brunswick’s Injury Regulation: Automobile Insurance Profits, Premiums, and Costs .pdf

How You Can Help

If you have been a victim of the Injury Regulation, you realize how easily you could become one, you are bothered by the fact the insurance industry is being allowed to profit unreasonably at the expense of victims and the New Brunswick economy, or you simply have a problem with the basic unfairness of the cap, you can do your part to help us persuade the government to remove it from the books.


Frequently Asked Questions (FAQ)

The following are some of the most frequently asked questions or comments made by the government and the Insurance Industry:

1. What about the suggestion that premiums have stabilized and auto insurance is now under control because of the Injury Regulation?

That is the favorite answer of the Insurance Industry and surprisingly enough of Premier Shawn Graham when asked about the Injury Regulation. However, to believe there is any truth to this statement, you must first believe that bodily injury claims caused the dramatic surge in premiums from 2000 to 2004. The economic report contained on this web site analyzed the Insurance Industry data from 1996 to 2006 and found no link between the surge in premiums and the average amount paid for bodily injury claims. As a matter fact, using the Insurance Industry’s data and its methodology the economists were able to confirm that bodily injury claims had been declining steadily since 1999.


Avg Bodily Injury Claim

Avg Premiums

























So with bodily injury claims decreasing steadily since 1999, it should be apparent that the introduction of the Injury Regulation in 2003 is not what brought stability in premiums. As a matter of fact, the Insurance Industry’s data shows that despite a steady decrease in injury claims payments from 1999, premiums rose dramatically for reasons unrelated to bodily injury claims.

2. If bodily injury claims were not the reason behind the surge in premiums, then what was?

Many factors unrelated to bodily injury claims can have an effect on auto insurance premiums. In fact, premiums are mostly set based on five components:

  1. Claims which consist of both bodily injury and car repairs as well as the expenses associated with adjusting these claims;
  2.  Investment returns on the market and reserves;
  3.  Administrative expenses;
  4.  Corporate taxes; and
  5.  Profits.

Reviewing the Insurance Industry data allowed us to confirm that bodily injury claims were decreasing and therefore not causing the surge in premiums. It also shows that investment returns were down but that would only have resulted in a fraction of the overall increase in premiums. Administrative costs and corporate taxes were stable and therefore did not require increases in premiums. The only component that significantly changed from 2000 to 2006 is that profits increased to levels never seen before in the Insurance Industry. It seems that what was driving the premiums up was the Industry’s desire to make unprecedented profits. So based on the data provided by the Industry, it seems that what would have assured stability in premiums for the consumers during that period was a cap on profits made by insurance companies instead of a cap on bodily injury claims.

3. Why does the Insurance Industry wants the government to cap bodily injury claims so much?

The drive behind every corporation is the need to make profits. The business of auto insurance is no different. Insurance companies make money based on their overall success in assessing risk. In other words, they try to foresee the odds of their policy owners (customers) being involved in an auto accident and what will be the magnitude of the damages they will pay. They then charge their customers a price to provide them with the financial protection that if an accident does occur, it will not cost that customer anything because it will be covered by the insurance company. As a result, the object of the game is to get the best customers out there; those less likely to be in an accident. If a company is successful at it, then it collects millions of dollars every year and does not have to pay anything out.

Obviously, it is more complicated than that since insurance companies also take the money they charge their customers for insurance and invest that money in the market to make more money. However, when you keep it to the basic example, it is easy to see why insurance companies have lobbied so hard for a cap on bodily injury claims. A cap on claims ensures that they will not have to pay much if they are not successful at assessing the risk of an accident happening. So why do insurance companies want a cap on injury so much? -- It is because it makes their business extremely profitable with hardly any risk of having to pay claims. It allows them to have the luxury of selling a product which they know will hardly be used by their customers and, if it is, then the maximum they have to pay is $2500.

4. What about the comments of the Premier and the Minister of Justice that it would be irresponsible for the government to intervene when there is a pending court challenge to the Injury Regulation?

That is the bread and butter answer of the Liberal government which always draws support from the Insurance Industry. The part that the Liberal government does not tell you, is that the pending court challenge is on the constitutionality of the Injury Regulation and not its interpretation. There have already been two court decisions interpreting the Injury Regulation and one was handed down by the highest court in the province, our Court of Appeal - Rossignol v. Rubidge 2007 NBQB 89 and Fraser v. Haines 2007 NBQB 285 upheld on appeal at 2008 NBCA 59 (HYPERLINK).

In both decisions, the victims suffered serious disabling injuries that severely disrupted their lives and continues to this day. For instance, Mr. Rossignol suffered a fractured tibia and fibula that required surgical reconstruction by inserting pins and screws to stabilize the bones in his leg. He was hospitalized for 8 days and released initially in a wheelchair, then a walker, then crutches and a cane. He was unable to drive a car for 6 months and did not walk unassisted for close to 2 years. The court found that by reason of the government’s definition of “minor personal injury” it had no choice but to rule that the injury suffered by Mr. Rossignol was a minor personal injury and thereby subject to the $2,500.00 cap.

The problem with this flawed definition has been clearly known by this Liberal government since March 2007 and yet they have chosen not to fix it. Furthermore, the Liberal government knows that the problem stems from the drafters who, by lifting the wording of the definition of “minor personal injury” from an Ontario legislation crafted to remove the right to sue except in cases of catastrophic injuries, have unfortunately circumvented the intent of the former government to only put a $2500 cap on “minor personal injuries”. As a result of this simple copy and paste job, we are now faced with a definition that considers every injury short of catastrophic a “minor personal injury”.

So when the Liberal government and the Insurance Industry say that it would be irresponsible to modify the Injury Regulation with a pending court decision on the constitutionality of the regulation, they are mixing apples and oranges. The constitutional challenge aims at removing the regulation altogether for being discriminatory. If that challenge fails, New Brunswickers will still be left with a flawed definition. What is truly irresponsible is for the Liberal government to let this flawed definition continue on while victims continue to be denied proper compensation and the province’s economy continues to be drained by the Insurance Industry.

5. What about the suggestion that if the Injury Regulation is removed another insurance crisis will occur and premiums will have to dramatically increase again?

First and foremost, the Insurance Industry's economic data shows that if the Injury Regulation was completely removed, the Industry would achieve an after tax return on equity of approximately 13.3%. This rate of return still exceeds the rate of 10% which is considered by experts in the Industry and the New Brunswick Insurance Board as a fair and reasonable profit for auto insurers.

Secondly, premiums cannot increase by more than 3% without prior approval of the New Brunswick Insurance Board (section 267.51(1) of the Insurance Act). Among the many changes to insurance brought in by the former government was the creation of a regulatory body for auto insurance – the New Brunswick Insurance Board. As a result, the Board has the mandate to review and assess any request for increase of 3% or more in auto insurance premiums. Given the industry’s extraordinary profits since the introduction of the Injury Regulation in 2003, there is no chance any such application would be successful.

Furthermore, an additional regulatory body was also created by the former government - The Office of the Consumer's Advocate. The Consumer Advocate's mandate is to protect and investigate any unfair and discriminatory tactics of auto insurers in setting premiums. Therefore, should the Industry retaliate against consumers for the removal of the Injury Regulation, it would be squarely within the mandate of the Consumer advocate to regulate and control against such actions.

6. What about the government's actuarial report that says the removal of the Injury Regulation would increase premiums by $200 to $250?

Any expert will tell you that the value of a report is only as good as the data it used to make its findings. The problem with the Liberal government’s actuarial report is that it is based on “projections” as opposed to actual data. Therefore, there is no value in a report that at its onset does not use in its calculation the actual data of the Insurance Industry. This is why the economic report commissioned by the CBA and available on this web site is so powerful and compelling. The CBA report is based on a decade of actual data as provided by the Insurance Industry for the period of 1996 to 2006. Furthermore, the CBA report used the same methodology employed by the Insurance Industry to make its calculations. This twofold process eliminated any subjective possibility to present the economic data in a manner to suit the CBA message. The results obtained by the CBA are the results which were obtained by the Insurance Industry with their subjective analysis of the data. These are Insurance Industry numbers, not our numbers. And, on this basis, it is clearly untrue that the removal of the Injury Regulation would require an increase of $200-250 in premiums.

7. How can a Court find that a seriously disabling injury such as a broken pelvis or leg is a minor personal injury?

The problem lies with the definition of “minor personal injury” as contained in the Injury Regulation. The previous government, in its haste to adopt legislation in the midst of a manufactured insurance crisis that threatened its survival, simply lifted the wording from a piece of Ontario legislation which had been adopted in that province for eliminating the right to sue except for catastrophic injuries. The following table puts the wording of the 2003 New Brunswick Injury Regulation side by side with the wording of the 1990 Ontario legislation. Pay close attention to the words highlighted in blue:

Section 2(2) of the New Brunswick Injury Regulation

2(2) In this Regulation and for the purposes of section 265.21 of the Act

"minor personal injury" means an injury that does not result in

(a) permanent serious disfigurement, or

(b) permanent serious impairment of an important bodily function caused by continuing injury which is physical in nature; (« blessures personnelles mineures »)

"serious impairment" means an impairment that causes substantial interference with a person's ability to perform their usual daily activities or their regular employment. (« déficience grave »)

Section 266 of the Ontario Insurance Act

266. __ (1) In respect of loss or damage arising directly or indirectly from the use or operation, after the 21st day of June, 1990, of an automobile and despite any other Act, none of the owner of an automobile, the occupants of an automobile or any person present at the incident are liable in an action in Ontario for loss or damage from bodily injury arising from such use or operation in Canada, the United States of America or any other jurisdiction designated in the No-Fault Benefits Schedule involving the automobile unless, as a result of such use or operation, the injured person has died or has sustained,

(a) permanent serious disfigurement; or

(b) permanent serious impairment of an important bodily function caused by continuing injury which is physical in nature.

The obvious problem of a “copy and paste” job like the above is that it rarely reflects the intent behind the legislation.

In Ontario, the terminology was used to reflect the intent of a government whose primary intention was to eliminate the right to sue in exchange of more generous no-fault benefits. In crafting the wording, the Ontario government wanted all injuries to be encompassed by the terminology with the exception of catastrophic injuries.

In New Brunswick, the government’s intent was to cap non pecuniary damage awards for all minor personal injuries. See the debates as contained in the Hansard records of the Legislative Assembly. It was not the intent of the government to have all injuries deemed “minor” with the exception of catastrophic injuries. Unfortunately, by doing a copy and paste job, it is exactly what they ended up with.

The flawed definition of “minor personal injury” is essentially one that says that a minor injury is an injury that is not a catastrophic injury. This flawed definition simply allows insurance companies to argue that any injury (disabling, serious, moderate and so on) that is not catastrophic is a “minor personal injury” under the law. This has been a well known fact by the current government since March 2007 when two court decisions interpreted the definition of “minor personal injuries” as encompassing serious and disabling injuries. In particular, the Fraser v. Haines decision went all the way to the Court of Appeal, our province's highest Court.

So it is irresponsible of this government to attempt to confuse the issue by saying that this debate is before the Court. What is before the Court is whether the Injury Regulation is discriminatory and thereby in violation of the Charter of Rights and Freedom. The interpretation of what constitute a “minor personal injury” is not before the Court since it was already decided in 2007.

8. The government says that changing the law takes a long time and it cannot be accomplished overnight?

This type of comment is another attempt at mixing apples and oranges. The Injury Regulation is not a law – it is a regulation adopted by the lieutenant governor in council (a fancy way of saying the cabinet). So to change the Injury Regulation, all it takes is the will of the government and the strike of a pen. This can literally and factually be done overnight.

If it was legislation then it would require a vote and the approval of the Legislative Assembly. However, with respect to the Injury Regulation, that is not the case. All it needs is for Premier Shawn Graham to convene his cabinet and have the amendments approve by same.

So there is no valid reason for this Liberal government not to act with a quick amendment to the regulation and thereby putting an end to this injustice. By continuing to delay on this, the Liberal government is allowing the Insurance Industry to continue making unreasonable profits. It should not be a surprise that this government draws praise from the Insurance Industry. New Brunswick is the harshest province on its victims and the most profitable province for the Insurance Industry.

Any requests of the government to at least fix the definition, is answered by one of the following (1) the industry is stable; (2) a court decision is pending or (3) premiums will go up if we change it. As shown through the above information, not one of these reasons is valid.  Clearly, this Liberal government puts the need to be cosy with the Insurance Industry over the need to protect its electorate and be a responsible steward of the New Brunswick's economy.