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Fourth Session, 44th General Assembly 51 Elizabeth II, 2002 |
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BILL 28 |
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AN ACT TO AMEND THE AUTOMOBILE INSURANCE ACT, THE INSURANCE COMPANIES ACT AND THE HIGHWAY TRAFFIC ACT TO EFFECT CERTAIN REFORMS RESPECTING AUTOMOBILE INSURANCE ARISING FROM THE RECOMMENDATIONS OF THE SELECT COMMITTEE TO REVIEW THE PROPERTY AND CASUALTY INSURANCE INDUSTRY AND THE GOVERNMENT'S PUBLIC CONSULTATION |
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Received and Read the First Time |
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Second Reading |
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Committee |
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Third Reading |
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Royal Assent |
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HONOURABLE WALTER NOEL Minister of Government Services and Lands |
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Ordered to be printed by the Honourable House of Assembly |
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EXPLANATORY NOTES Clause 1 of the Bill would define the words "agent", "broker" and "representative" for the purposes of the Automobile Insurance Act. Clause 2 of the Bill would amend the Automobile Insurance Act to require forms used by the Facility Association be approved by the Superintendent of Insurance. Clause 3 of the Bill would amend the Automobile Insurance Act to require that a person be informed why he or she is being provided insurance through the Facility Association. The clause would also require the Facility Association to report quarterly to the Superintendent of Insurance the number of persons it has insured and the reasons for doing so. The clause would also require an agent, a broker or a representative to provide information respecting their agreements with insurers to purchasers of insurance. The clause would also require an agent, a broker or a representative to provide information to purchasers of insurance relating to quotations on automobile insurance obtained from insurers. The clause would also permit an insured person to pay his or her insurance premium in equal monthly instalments. Clause 4 of the Bill would amend the Automobile Insurance Act to require an insurer to inform an insured of the receipt of a claim against the insured's policy and of the amount of a payment made in satisfaction of the claim. The clause would also permit a claimant to apply to a judge for an order directing an insurer to pay compensation periodically to the claimant. The clause would also require an insurer to attempt to settle a claim as expeditiously as possible and to make interim payments pending determination of the full amount of compensation. The clause would also provide that a payment by an insurer for loss of income is payable on the net loss of income of the claimant. Clause 5 of the Bill would amend the Automobile Insurance Act to provide that compensation for injury or death may be reduced by 25% where the person injured or killed in the accident was not wearing a seat belt. Clause 6 of the Bill would amend the Automobile Insurance Act to provide that the Public Utilities Board shall establish the maximum rates an insurer may charge. Clause 7 of the Bill would amend the Automobile Insurance Act to authorize regulations to be made to give effect to the amendments proposed in clauses 3 and 4. Clause 8 of the Bill would amend the Insurance Companies Act to increase the minimum capital requirements for new insurance companies from $1 million to $3 million. Clause 9 of the Bill would amend the Insurance Companies Act to authorize the minister to enter into agreements with compensation associations to compensate persons insured in the event of the failure of an insurer, including compensation for the unearned portion of premiums. The clause would require insurers to become members of a compensation association with whom the minister had made an agreement. Clause 10 of the Bill would amend the Insurance Companies Act to transfer responsibility for the compilation of statistical information from the Superintendent of Insurance to the Public Utilities Board. Clause 11 of the Bill would amend the Insurance Companies Act to provide for the regulation of underwriting guidelines and their monitoring by the Public Utilities Board. The clause would provide similarly with respect to a risk classification system. Clause 12 of the Bill would amend the Insurance Companies Act to authorize the Superintendent of Insurance to withdraw an approval for all or a portion of the Facility Association's Plan of Operation. Clause 13 of the Bill would amend the Insurance Companies Act to authorize regulations to give effect to the amendments proposed in clauses 9 and 11. Clauses 14, 15, 16 and 17 of the Bill would amend the Highway Traffic Act to increase penalties for operating a motor vehicle without insurance. The new penalties would include the suspension of the driver's licence of the owner of a vehicle driven without being insured and the seizure and impoundment of the vehicle.
A BILL AN ACT TO AMEND THE AUTOMOBILE INSURANCE ACT, THE INSURANCE COMPANIES ACT AND THE HIGHWAY TRAFFIC ACT TO EFFECT CERTAIN REFORMS RESPECTING AUTOMOBILE INSURANCE ARISING FROM THE RECOMMENDATIONS OF THE SELECT COMMITTEE TO REVIEW THE PROPERTY AND CASUALTY INSURANCE INDUSTRY AND THE GOVERNMENT'S PUBLIC CONSULTATION Analysis AUTOMOBILE INSURANCE ACT 1. S.2 Amdt. 2. S.4 Amdt. 3. Ss.6.1 to 6.4 Added 4. Ss.26.1 to 26.4 Added 5. S.28.1 Added 6. S.50 Amdt. 7. S.60 Amdt. INSURANCE COMPANIES ACT 8. S.14 Amdt. 9. Ss.18.1 and 18.2 Added 10. S.82 R&S 11. Ss.96.1 and 96.2 Added 12. S.101 Amdt. 13. S.107 Amdt. HIGHWAY TRAFFIC ACT 14. S.9 Amdt. 15. S.75 Amdt. 16. S.186 Amdt. 17. Sch. Amdt. Be it enacted by the Lieutenant-Governor and House of Assembly in Legislative Session convened, as follows: AUTOMOBILE INSURANCE ACT RSNL1990 cA-22 1. (1) Paragraph 2(a) of the Automobile Insurance Act is amended by renumbering it as paragraph (a.1). (2) Section 2 of the Act is amended by adding immediately before paragraph (a.1) the following: (a) "agent" means an agent as defined in the Insurance Adjusters, Agents and Brokers Act; (3) Section 2 of the Act is amended by adding immediately after paragraph (c) the following: (c.1) "broker" means a broker as defined in the Insurance Adjusters, Agents and Brokers Act; (4) Section 2 of the Act is amended by deleting the word "and" at the end of paragraph (l) and by adding immediately after that paragraph the following: (l.1) "representative" means a representative as defined in the Insurance Adjusters, Agents and Brokers Act; and
2. (1) Section 4 of the Act is amended by adding immediately after subsection (1) the following: (1.1) Subsection (1) applies to the Facility Association as if the association were an insurer. (2) Section 4 of the Act is amended by adding after subsection (8) the following: (9) Subsection (8) applies to the Facility Association as if the association were an insurer.
3. The Act is amended by adding immediately after section 6 the following: Applicant to be given reasons 6.1 (1) An agent, a broker or a representative shall, in writing, inform a person to whom it provides automobile insurance through the Facility Association of the reasons why the association is the provider of the insurance and shall provide a copy to the association. (2) An agent, a broker or a representative shall annually, while it provides automobile insurance to a person through the Facility Association, inform the person, in writing, of the reasons why the association is the provider of the insurance. Facility Association to report to superintendent 6.2 The Facility Association shall quarterly report to the superintendent the number of drivers to whom it has provided automobile insurance in the quarter and the reasons why it is the provider in each case. Information from brokers 6.3 (1) An agent, a broker or a representative shall, on request, provide an applicant for insurance with the names of all the insurers with whom the agent, broker or representative has an agency contract, or whom the representative represents, relating to automobile insurance, and all information obtained by the agent, broker or representative relating to quotations on automobile insurance for the applicant. (2) An agent, a broker or a representative shall provide the information referred to in subsection (1) in writing if the applicant so requests. Monthly premium payments 6.4 (1) An insured may pay the premium required under a policy, without penalty, in equal monthly payments totalling the amount of the premium. (2) An insurer may charge interest not exceeding the rate set out in the regulations where an insured pays a premium in equal monthly payments. (3) An insurer is not required to permit an insured to pay the premium in instalments unless all of the following conditions are met: (a) the insurer, together with its affiliates, insured at least 5,000 private passenger automobiles in the province during the previous year; (b) the contract does not insure a commercial motor vehicle, an ambulance or a taxi as defined in the Highway Traffic Act; (c) the contract does not insure 5 or more vehicles that are under common ownership or management; (d) the total annual premium payable under the contract exceeds $300; and (e) the insured has not had more than one automobile insurance policy terminated by an insurer for non-payment of the premium during the 36 months before the contract takes effect. (4) As a precondition for permitting an insured to pay the premium in instalments, an insurer may require that the insured, (a) make an initial payment equal to 2 monthly instalments of the premium; and (b) agree to make all payments under the contract by pre-authorized payment from the insured's account at a financial institution. (5) The amount of each instalment payment shall be calculated as blended principal and interest. (6) An insurer who is not required to permit its insureds to pay their premiums in instalments but who chooses to do so is subject to the same requirements as those insurers who are required to permit their insureds to pay their premiums in instalments. (7) This section applies to the Facility Association as if the association were an insurer.
4. The Act is amended by adding immediately after section 26 the following: Insurer to give notice of claim 26.1 (1) Where an insurer receives a claim from a person who is or alleges to be entitled to recover from an insured covered by a motor vehicle liability policy, the insurer shall, in writing, inform the owner of the vehicle and named insured of the receipt of the claim. (2) An insurer who makes a payment on behalf of an insured under a contract evidenced by a motor vehicle liability policy to a person making a claim shall, in writing, inform the owner and named insured of the vehicle of the total amount paid with respect to the claim. Application for periodic payment 26.2 (1) An injured person, or the administrator or a beneficiary of the estate of a deceased person, to whom or on whose behalf compensation is payable under a contract evidenced by a motor vehicle liability policy for bodily injury or death caused by an automobile or the use or operation of an automobile may apply to a judge of the Trial Division for an order directing an insurer to pay the compensation periodically. (2) A judge to whom an application is made under subsection (1) may make an order directing an insurer to pay compensation periodically on the terms the judge considers just. Settlement of claims 26.3 (1) An insurer who is defending an action on behalf of an insured arising out of bodily injury to or the death of a person or loss or damage to property caused by an automobile or the use or operation of an automobile shall attempt to settle the claim as expeditiously as possible. (2) Where an insurer admits liability in respect of all or part of a claim, the insurer shall make payments to the person making the claim pending the determination of the amount owing. (3) The amount of the payment under subsection (2) shall be based on the insurer's estimate of the amount owing in respect of the claim having regard to information provided to the insurer by the person making the claim. (4) Subsections 26(1), (2) and (3) apply, with the necessary changes, to an advance payment made under this section. (5) An insurer's failure to comply with this section shall be considered by the court in awarding costs. Benefits related to loss of income 26.4 (1) Where, under a contract, an insurer pays compensation for loss of income, the amount of the compensation shall be based on the net loss of income of the claimant. (2) For the purpose of subsection (1), the net loss of income shall be determined as set out in the regulations.
5. The Act is amended by adding immediately after section 28 the following: Award reduced for failure to wear seat belt 28.1 (1) Where a person who is required by section 178 of the Highway Traffic Act to be wearing a seat belt assembly sustains bodily injury or dies in an accident while the person is not wearing a seat belt assembly, the amount recoverable by the person, or his or her personal representative, as damages for bodily injury or death in an action arising out of the accident shall be reduced by 25%, unless the person or his or her personal representative establishes that the failure to wear the seat belt assembly did not contribute to the bodily injury or death. (2) Where a person to whom subsection (1) applies contributed to his or her bodily injury or death by other acts or omissions in addition to the failure to wear a seat belt assembly, and the person or his or her personal representative does not establish that the failure to wear a seat belt assembly did not contribute to the bodily injury or death, the reduction in the amount of damages shall be determined with regard to all circumstances but shall not be less than 25%. (3) Subsection (1) does not apply to a person who sustains bodily injury or dies in an accident while the person is wearing a seat belt assembly but is not wearing it in a properly adjusted and securely fastened manner as required under section 178 of the Highway Traffic Act.
6. Section 50 of the Act is amended by renumbering it as subsection 50(1) and by adding immediately after that subsection the following: (2) The board shall establish the maximum rates that an insurer may charge for automobile insurance. (3) The board shall not refuse to approve a rate for the reason only that it is lower than the maximum set under subsection (2).
7. Subsection 60(1) of the Act is amended by (a) deleting the word "and" at the end of paragraph (f); and (b) adding immediately after paragraph (g) the following: (g.1) setting the rate of interest for the purpose of subsection 6.4(2); (g.2) determining what constitutes net loss of income for the purpose of section 26.4; and INSURANCE COMPANIES ACT RSNL1990 cI-10 8. Section 14 of the Insurance Companies Act is amended by adding immediately after subsection (2) the following: (2.1) After January 1, 2003, the superintendent shall not issue a licence to an insurer which is a company incorporated in the province undertaking one or more classes of insurance other than life insurance except upon proof satisfactory to the superintendent that at least $3,000,000 of its subscribed capital has been paid in, in cash. (2) Subsection 14(3) of the Act is amended by striking out the word and numbers "(1) and (2)" and substituting the word and numbers "(1), (2) and (2.1)". (3) Subsection 14(4) of the Act is amended by adding a comma and the number "(2.1)" immediately after the number "(2)".
9. The Act is amended by adding immediately after section 18 the following: Agreements with compensation associations 18.1 (1) The minister may enter into agreements with compensation associations relating to a plan for the compensation by compensation associations of policyholders of, and eligible claimants on, insolvent insurers. (2) An agreement made under subsection (1) may exempt a specifically named insurer from membership in the compensation association that is a party to the agreement. Membership in compensation association 18.2 (1) Where a compensation association is designated under the regulations for a class of insurance prescribed by the regulations, every insurer licensed to carry on that class of insurance and, except for the classes of life and accident and sickness insurance, for 183 days after ceasing to be so licensed, is a member of the compensation association. (2) Subsection (1) does not apply to an insurer (a) designated by the regulations; (b) whose business is limited to that of re-insurance; or (c) that is exempted from membership by an agreement made under section 18.1. (3) Every member of a compensation association is bound by the by-laws and articles of association of the association. (4) A member of a compensation association shall pay to the compensation association all assessments and levies made against the members by the association. (5) Where a member fails to pay an assessment or levy within 30 days of the mailing of the notice of assessment or levy to the member, (a) the association may claim the amount of the assessment or levy, with interest, as a debt due from the member; and (b) the minister may suspend, cancel or place conditions on the licence of the member to carry on the business of insurance. (6) A debt due under subsection (5) does not cease to be due on the termination of the member's membership in the association.
10. Section 82 of the Act is repealed and the following substituted: Record of automobile premiums and costs 82. (1) A licensed insurer that carries on in the province the business of automobile insurance shall, where the Public Utilities Board so directs, prepare and file with the board or with a statistical agency that the board may designate, a record of its automobile insurance premiums and of its loss and expense costs in the province in a form and manner and according to the system of classification that the board may prescribe. (2) The Public Utilities Board may require an agency designated under subsection (1) to compile the data filed under that subsection in a form that the board may prescribe and the expense of making the compilation shall be apportioned among the insurers whose data is compiled by the agency by the board who shall certify in writing the amount due from each insurer and the amount is payable by the insurer to the agency immediately. (3) The Public Utilities Board shall provide annually to the Minister of Health and Community Services information received from licensed motor vehicle insurers detailing automobile experience including the number of earned vehicles and the number of claims for each licensed insurer for the purpose of calculating a per vehicle levy. (4) Subsections 81(2) and (4) apply with the necessary changes to this section.
11. The Act is amended by adding immediately after section 96 the following: Underwriting guidelines 96.1 (1) This section applies to insurers with respect to contracts of automobile insurance only. (2) An insurer shall not decline to issue, terminate or refuse to renew a contract of automobile insurance or refuse to provide or continue a coverage or endorsement, for a ground set out in the regulations. (3) Subsection (2) does not apply in respect of a contract if a payment in respect of premiums payable under the contract or an agreement ancillary is overdue, or if the insured has (a) given false particulars of the described automobile to the prejudice of the insurer; or (b) has knowingly misrepresented or failed to disclose in an application for insurance a fact required to be stated in it. (4) The superintendent may exempt an insurer in whole or in part from compliance with subsection (2) if, in the opinion of the superintendent, compliance would impair the solvency of the insurer or would cause the insurer to be in contravention of this Act or the regulations, or an Act of another province or of Canada. (5) An insurer shall file with the Public Utilities Board the grounds on which it intends to decline to issue, terminate or refuse to renew a contract, or refuse to provide or continue a coverage or endorsement. (6) Where the Public Utilities Board determines that an insurer is not complying with subsection (2) or where the board becomes aware that an insurer is using a ground to decline to issue, terminate, or refuse to renew a contract of automobile insurance or to refuse to provide or continue a coverage or endorsement and that ground or the manner in which it applies (a) is subjective; (b) is arbitrary; (c) bears little or no relationship to the risk to be borne by the insurer in respect of an insured; or (d) is contrary to public policy, the board shall notify the insurer in writing that it is prohibited from using the ground. (7) Where the Public Utilities Board notifies an insurer that the insurer is prohibited from using a ground, the insurer may within 15 days appeal the decision to the Trial Division. (8) After hearing the appeal, the judge shall prohibit the insurer from using the ground or from using it in a prohibited manner if the judge finds that the ground or the manner in which it applies comes within paragraph (6)(a), (b), (c) or (d). (9) Where, within the time period allowed, the insurer does not appeal the decision, the Public Utilities Board may take any action described in the notice. (10) Where an insurer fails to comply with an order of the Trial Division, or with the notice of the Public Utilities Board where no appeal is made within the specified time, the superintendent shall cancel the licence of the insurer under this Act. (11) The Public Utilities Board may require insurers, agents, brokers and representatives to provide the information, material and evidence that the board considers necessary for the purpose of this section. Risk classification system 96.2 (1) This section applies to insurers with respect to contracts of automobile insurance only. (2) In this section (a) "rates" means rates as defined in the Automobile Insurance Act; (b) "risk classification system" means in relation to automobile insurance, the elements used for the purpose of classifying risks in the determination of rates for a coverage or a category of automobile insurance, including the variables, criteria, rules and procedures used for that purpose; and (c) "insurer" includes the Facility Association. (3) An insurer shall not use a risk classification system that (a) is not just and reasonable in the circumstances; (b) is not reasonably predictive of the risk; or (c) does not distinguish fairly between risks. (4) An insurer is prohibited from using in a risk classification system an element set out in the regulations. (5) An insurer shall file with the Public Utilities Board the risk classification system it intends to use in determining the rates for each coverage and category of automobile insurance and the filing shall be in a manner which the board may determine. (6) Where the Public Utilities Board determines that an insurer's risk classification system, or an element of its risk classification system, is prohibited by subsection (3) or (4), the board shall notify the insurer in writing and order the insurer to bring its risk classification system into compliance. (7) Where the Public Utilities Board issues an order under subsection (6), the insurer may within 15 days appeal the decision to the Trial Division. (8) After hearing the appeal, if the judge finds that the risk classification system or an element of the risk classification system is prohibited by subsection (3) or (4), the judge shall order the insurer to bring its risk classification system into compliance. (9) Where, within the time period allowed, the insurer does not appeal the decision, the Public Utilities Board may take an action described in the order. (10) Where an insurer fails to comply with an order of the Trial Division, or with an order of the Public Utilities Board where no appeal is made within the specified time, the superintendent shall cancel the licence of the insurer under this Act. (11) The Public Utilities Board may require insurers, agents, brokers and representatives to provide the information, material and evidence that the board considers necessary for the purpose of this section. (12) This section does not apply to contracts of automobile insurance that insure 5 or more vehicles that are under common ownership or management and are used for business, commercial or public purposes and to any endorsements to those contracts.
12. Section 101 of the Act is amended by adding immediately after subsection (2) the following: (3) The superintendent may withdraw an approval, previously given, to the Plan of Operation, or a portion of the plan, established by the association in its articles of association or by-laws. (4) The Plan of Operation, or a portion of the plan, is of no effect to the extent of the withdrawal of approval by the superintendent under subsection (3).
13. Section 107 of the Act is amended by adding immediately after paragraph (e) the following: (e.1) prescribing the coverage that a compensation association shall provide as a condition of becoming a party to an agreement with the minister under subsection 18.1(1); (e.2) respecting a matter referred to in section 18.2; (e.2) to give effect to subsections 96.1(2) and 96.2(4); HIGHWAY TRAFFIC ACT RSNL1990 cH-3 14. Subsection 9(1) of the Highway Traffic Act is amended by adding immediately after paragraph (a) the following: (a.1) to seize and impound vehicles under paragraph (6.1)(b);
15. (1) Subsection 75(2) of the Act is repealed and the following substituted: (2) The owner of a motor vehicle or, where the owner is not the operator of the motor vehicle, the person operating it, shall, when requested to by a peace officer, produce proof that a policy of insurance is in force with respect to the motor vehicle. (2) Section 75 of the Act is amended by adding immediately after subsection (6) the following: (6.1) A court that convicts a person for a violation of paragraph (5)(a) or (b) shall report the conviction to the registrar who shall by order in writing (a) suspend the driver's licence of the owner of the vehicle for a period of 30 days beginning on the date determined by the registrar and set out in the order; and (b) direct the seizure and impoundment of the motor vehicle by a peace office or a traffic officer for a period of 30 days beginning on the day the peace officer or traffic officer takes possession of the vehicle. (6.2) A person whose driver's licence is suspended under paragraph (6.1)(a) shall immediately return his or her licence to the registrar.
16. Section 186 of the Act is amended by adding immediately after paragraph (g) the following: (g.1) respecting the seizure and impoundment of vehicles under paragraph 75(6.1)(b) including prescribing the fees to be paid in relation to the impoundment and release of a vehicle;
17. The Schedule to the Act is amended by striking out, with reference to the penalty for a violation of paragraph 75(5)(b), the figures 3000 and 1000 where they twice occur and substituting the figures 4000 and 2000 in the first instance and the figures 5000 and 3000 in the second.
©Earl G. Tucker, Queen's Printer |