Engine light on: Vehicle insurance rate review opens with confusion over expected results

The provincial review of rising insurance rates barely got out of the driveway today before stalling due to confusion over just what the review is going to accomplish.

On the first day of hearingsJerome Kennedy, representing a group of lawyers to oppose a proposed cap on claims paid to accident victims, asked Public Utilities Boardchair Darlene Whelanif the board will makea recommendation on the cap, and Whelansaid the board won't.

If the Public Utilities Board were to saythey don't recommend a cap because it doesn't result in savings, I don't know how the government could, in good conscience, ignore that.- Jerome Kennedy

Kennedy said he was confused by Whelan's response.

"I assumed that the PUB would make recommendations to the government," Kennedy told reporters afterwards.

"The response of the chair seemed to be that they would be making recommendations on certain issues but not on others."

He noteda letter to Whalen, dated April 16, in which Service NL Minister Sherry Gambin-Walshsaid she looks forward to "receiving the board's recommendations by the end of June as it has committed."

"So I have to say I'm a little confused as to the comment of the chair today, but that's something we will explore as we move through this and hopefully be able to resolve exactly what it is that we're doing here."

Withthe amount of money and time two weeks have been set aside now, with more time in September that will be spent on the hearings, they have to have a "practical purpose" said Kennedy, a former Progressive Conservative MHA andcabinetminister.

Welcome recommendations

"We would certainly welcome recommendations, not that they are binding on government, but certainly that they will influence government in terms of the decision made," he said.

"And if the Public Utilities Board were to say that they don'trecommend a cap because it doesn't result in savings, then I don't know how the government could, in good conscience, ignore that."

The review of auto insurance rates was announced last Julyas a response to complaints from drivers.

Then-Service NL minister Perry Trimper said at the time that drivers were finding it difficult to cope with steadily increasing insurance costs.

Newfoundland and Labrador cab companies had also been looking forward to the review, having longraised alarms over rising insurance rates in the taxi industry

"Is itthe amount of accidents we are having? Is it the claims payout?" said Jiffy Cabs driver Doug McCarthy in July. "Is it revolving around personal injury or property damage What are the factors that are driving up our rates to the point where it is driving us out of business?"

Drivers staged protest

McCarthy said rising rates would hurt rural Newfoundland especially, for people who have no personal vehicles or available public transportation.

"If it gets to the point where taxi drivers can no longer afford to insure their vehicle, how are these people going to get around? Especially the seniors?" he said.

Taxi drivers staged a protest outside Confederation Building in February, honking their horns and driving around the parking lot, ahead of a 18.6 per cent increase March 1.