Let The Band Play On

I see that Nova Scotia's automobile insurers are crying in their champagne beer again, this time over the Dexter's government minor changes to the "minor injury" cap.  Oh dear, what can the matter be?  Cue the world's smallest violins.

Of course, they're not just crying about it, they're eminently more practical than that -  the line up out the door of the Utility and Review Board no doubt snakes down the block.  Because even though they still have no idea of how, exactly, the changes will actually affect their bottom lines, they know it can't be good.

The Dominion of Canada General Insurance Co. said the changes will reverse the trend of declining bodily injury premiums.

Dominion vice-president Steve Whitelaw said the new definition is narrower and will cause fewer claimants to be within the minor injury definition, resulting in higher frequency.

"Combined with the trebling of the minor injury cap amount and its future indexing, there will certainly be an increase in associated costs," he said a written submission.

So then, let's recap, shall we?

In November, 2003, the provincial government passed legislation imposing a $2,500 cap on general damage awards for "minor injuries".  Which, there were only a couple of problems with that.

One being that the statutory definition of  a "minor injury" was so ridiculously restrictive that it eliminated, not only what you and I would consider a "minor injury", but the vast majority of injury claims, including people who suffered fractures, some forms of disfiguring injuries, and long term chronic pain. "Minor injury", right?

The second issue was that, really, limiting compensation for all whiplash injuries, as just one example, to $2,500 was ridiculous.  No, believe it or not, I am not in the camp of the many who would advocate removing such a cap altogether.  Although there was no danger of it happening any time within the next century in Nova Scotia, it's no stretch to say that awards for pain and suffering for whiplash injuries have gotten out of hand in many jurisdictions.  So, sure, let's have a cap.  But let's make sure the term "minor injuries' is defined to actually mean minor injuries.  And let's set the cap at a more reasonable level ... like maybe $10.000, for example. 

Now the thing to realize here is that I am not advocating that every individual with a whiplash-type injury or a sore neck for a week or two should be awarded $10,000.  The word "cap" means exactly that. A cap. As in this is the maximum amount you can be awarded for this type of injury.  But if your injury is assessed as being worth less than that, as being worth $2,000 or $5,000, then that's what you will receive.  It's just that you will receive no more than the capped amount for this type of injury.

And yet the 2003 legislation. as written, was the least of our problems.  Something much more egregious was happening.  And there was no way to fault the government for this one - it was purely the work of the insurance companies.

Let's say I was involved in a motor vehicle accident in October, 2003  and suffered a moderate whiplash. And let's say my insurance company and I went to court to have the judge determine how much I was entitled to for pain and suffering.  And let's also say that that judge awarded me $15,000 for that injury.

Now, let's say I had that very same motor vehicle accident, suffering that exact same injury in December, 2003.  The reasonably intelligent person might presume that if I went to court I would have been awarded $2,500, the amount of the cap, right?  Well, apparently, your friendly neighbourhood insurer isn't at all related to a reasonably intelligent person because insurers were offering individuals in such circumstances much, much less than $2,500. 

Even though their injury would have been assessed at $15,000 prior to the cap (which the insurers well knew), all some insurers were telling people that the $2,500, the maximum available under the cap, was really only reserved for those who had the worst possible types of "minor injuries", remembering, of course, that the definition of a "minor injury" included individuals with fractures and long term chronic pain.  So, you, you poor sucker, having suffered an injury that was worth $15,000 the day prior to the cap being legislated, you were now only entitled to ... oh, let's say .... $1,000.

Now remember, no court had ever ruled on such a case, had ever declared that this was how the cap was to be interpreted.  This was something the insurance companies came up with entirely on their own.  And no, nobody could take it to court to find out because with compensation capped at $2,500 for minor injuries, no lawyer was willing to take the matter on, certainly not on a contingency basis, at any rate.

So, how do you think all that was playing out for Nova Scotia's insurers? 

Can you say hog heaven? 

Of course, that government mandated 20% decrease in insurance rates didn't bother them too much - after all, it was only mandated for the first year after the cap was imposed.  After that it was Bob's your Uncle ... excuse me, let's make that Bob's your very well off handsomely paid Uncle.

And then, lo and behold, tragedy of all tragedies ... the NDP government dares, dares to restrict the  definition of a minor injury to sprains, strains and certain kinds of whiplash. That's right, they dared to bring the definition more in line with what the insurance industry had  asked for when they were lobbying for the original minor injury cap. How dare they?!

And, you're not going to believe this, but that same government had unmitigated gull to raise the cap on such injuries to a much more reasonable level! I mean, no wonder those poor insurers are crying in their champagne beer.

So, yeah, in case you can't tell, I'm not feeling a whole lot sympathy empathy nothing for Nova Scotia's insurance industry at the moment.  Because, really, when you think about it, they're still getting a pretty good deal.  And it's well past time for Nova Scotia consumers to be getting a better deal, too.