The Facts

The introduction provides a good overview of the facts, but to summarize, there are two distinct problems with the Injury Regulation.

1. It never should have been brought in the first place. The Insurance Industry led the people of New Brunswick and the government to believe that bodily injury claims were spiralling out of control and that this was the cause behind the dramatic increase in premiums On the other hand, Insurance Industry data from 1996 to 2006 show that bodily injury claims had been actually falling since 1999 and not the cause behind the dramatic surge in premiums from 2000 to 2004 as suggested by the Industry.

2. The wording of the Injury Regulation does not reflect the intent of the Legislature.  Rather than reflecting the Legislature’s desire that the $2500 cap only apply to “minor personal injuries”, the drafters lifted wording from a piece of legislation emanating from Ontario which was designed for a very different purpose.  The aim of the Ontario legislation was to eliminate the right to sue for all injuries except those that are catastrophic.  By incorporating the wording from the Ontario legislation into New Brunswick's Injury Regulation to define a "minor personal injury", the drafters have created a situation where all injuries, except the most catastrophic, are deemed to be "minor personal injuries".

Ever since the $2500 cap was brought in 2003, the insurance industry has been enjoying unprecedented profits of anywhere from double to four times what is considered fair and reasonable.  As a result, this has created a significant financial drain on the New Brunswick's economy of more than a quarter of a billion dollars since 2003 in addition to putting a direct strain on the province's social and medical programs.

The insurance industry will argue that removing the cap will trigger increased premiums. That will be a scare tactic and here is why. Among the changes brought in by the former government was the creation the New Brunswick Insurance Board.  As a result, auto insurers cannot increase premiums by more than 3% unless prior approval from the Insurance Board has been obtained (section 267.51 of the Insurance Act).  In light of the industry’s unprecedented profits since 2003, there is no chance any such application would be successful.   

Furthermore, the Insurance Industry's economic data shows that even with the complete removal of the Injury Regulation, the Industry would still enjoy profits of approximately 13.3% return on equity, after tax, which is comfortably above the 10% mark recognized as reasonable by the experts and the New Brunswick Insurance Board.