After more than a decade of discussion, drafting and consultation, the Maritime provinces are moving ahead with harmonized insurance legislation that will bring consistency to rules and regulations for all three provinces. But the effort is getting a lukewarm response from industry.

The reason for that half-hearted endorsement has nothing to do with what is in the proposed legislation; rather, it has to do with what is not in the legislation, and who is not a party to the process. “It’s good that they’re doing it,” says Don Forgeron, Atlantic vice president of the Insurance Bureau of Canada. “It’s not so good that it’s only three provinces. And it’s not so good that it excludes the most critical area of insurance.”

In a small and very quiet announcement, the premiers of Nova Scotia, New Brunswick and Prince Edward Island recently noted that they had “reaffirmed their joint commitment to pursue insurance harmonization, and directed their respective departments responsible for insurance to begin drafting legislation and regulations of a Maritime Harmonized Insurance Act for products other than automobile insurance.” The absence of both Newfoundland and Labrador and automobile insurance from the announcement took industry insiders and government officials by surprise.

Indeed, early in this process, which started in the 1990s, Newfoundland and Labrador was a prime player. A few years later, with the province still an active partner, the entire emphasis of the harmonization effort switched to automobile insurance — an issue that thrust all four Atlantic governments into public turmoil and almost cost one premier, New Brunswick’s Bernard Lord, a provincial election.

It is not clear why Newfoundland and Labrador has backed out of the initiative, which will see a model insurance act enacted in the remaining three provinces.
Certainly, the Newfoundland government was involved as late as last year. However, resources may be at the heart of the
defection, insiders say.

On the auto insurance front, each province in the region has grappled with an angry public and scrambled to introduce reforms that would make paying auto insurance less painful. Nowhere have reforms been as significant as in Newfoundland and Labrador.

Still, that is no reason for throwing the baby out with the bathwater. As Forgeron says of harmonization: “This is a notion we still support. We invested a lot of time and energy in keeping this issue alive.”

The industry is not alone in its drive to see harmonized legislation in place. In each province, the superintendent of insurance has been working on this initiative for more than 10 years.

Ironically, notes Doug Murphy, Nova Scotia’s superintendent of insurance, it was the auto insurance crisis that derailed the initial effort. “Energy went into dealing with [the auto insurance] issue,” he says. “That became the major file for these offices.”

The harmonization project is clearly back on track. All three Maritime premiers have publicly announced they are moving ahead with harmonized legislation, and that legislation is more imminent than theoretical. Murphy predicts a model act will be up and running in each province in two years.

But a lot of work still needs to be done.

Although the provinces share common concerns about insurance monitoring and regulation, they also have many differences.
There are, for instance, different appeal processes in place in each of the three Maritime provinces.

Changes are also being made to existing provincial legislation that will need to be reflected in the final act. P.E.I., for example, until recently had a residency rule that required all companies offering insurance to have an office in the province. “We’ll have to update as we go along,” says Murphy.

Ultimately, he adds, the goal is to have one piece of legislation that fits all three provinces. “We have a commitment to harmonize everything as much as possible,” Murphy says. “There may be provincial
variances, but we are attempting to limit those.”

The need for harmonized legislation comes down to two critical factors: scope and process. “Harmonization has many advantages, not the least of which is that we are a very small region and could benefit from more competition. One way to become more competitive is to make the environment more attractive to business,” says Forgeron.

Reduced rates

There is another, further-reaching benefit, he adds: “[This legislation] also serves as a model for government in the region working to take collaboration to a higher level.”

@page_break@Another possible advantage is reduced rates for consumers. “This initiative has the potential to result in cost savings with respect to insurance products,” says P.E.I.
Premier Pat Binns. “Participating in this initiative also demonstrates our collective efforts to increase accessibility and affordability of insurance products in the Maritime region.”

This legislation is not the first foray into harmonization, but it is the most extensive.
“This is a major piece of legislation,” says Murphy.

Once finalized, the legislation — all 300 pages of it in its current form — will make it easier for insurance companies to file rates and other required information, and it will enhance consumer protection with respect to enforcement and market conduct.

At present, two drafters are reviewing the proposed model act, which has been sitting on a shelf since 2003. Once the dusting off and updating is complete, the model harmonized insurance act will move to each provincial legislature to be made into law.
IE