Newfoundland and Labrador Automobile Insurance Changes Legislative Update

Newfoundland and Labrador Automobile Insurance Changes Legislative Update – Effective January 1, 2020

What has changed? As previously announced by the government of Newfoundland and Labrador, the province is changing to a direct compensation system of automobile insurance as of January 1, 2020. In a collision with two or more cars, motorists now settle claims for which they are not at fault with their own insurer. This direct compensation system replaces the adversarial tort system previously used, where motorists dealt with the at-fault driver’s insurer.

For more information: https://www.releases.gov.nl.ca/releases/2019/servicenl/0415n05.aspx http://www.facilityassociation.com/

How does this affect me? At present, some Insurance Institute of Canada textbooks describe the automobile insurance situation as it was in 2019: they describe Newfoundland and Labrador as using a tort system for automobile insurance, and/or they omit Newfoundland and Labrador when listing provinces that use a direct compensation system.

As part of our scheduled product review and update cycle, this information will be revised during 2020 to reflect the new system in Newfoundland and Labrador.

Affected textbooks are listed in the table below. New material may be reflected in the exams beginning on the dates shown.

Textbook Edition Date Exam Session Ontario Auto Supplement 2016 Beginning January 1, 2020 C14: Automobile Insurance—Part 1 (Alberta) 2017 April 2020 C14: Automobile Insurance—Part 1 (Atlantic) 2017 April 2020 C14: Automobile Insurance—Part 1 (Manitoba) 2017 April 2020 C14: Automobile Insurance—Part 1 (Quebec) 2017 April 2020 C14: Automobile Insurance—Part 1 (Saskatchewan) 2017 April 2020 C48: Automobile Insurance—Part 2 2016 April 2020 C110: Essentials of Loss Adjusting 2018 April 2020 C111: Advanced Loss Adjusting 2009 April 2020 C130: Essential Skills for the Insurance Broker and Agent 2019 April 2020 C131: Advanced Skills for the Insurance Broker and Agent 2019 July 2020

List of changes to each text Attached is a complete list of changes to each text (study, page, and content update). These changes are also posted at https://www.insuranceinstitute.ca/en/cip-fcip-designations/cip/program-courses/Texts-SRGs- Addenda.

Newfoundland and Labrador Automobile Insurance Changes Legislative Update – Effective January 1, 2020

Study Page Content Change # # Ontario Auto Supplement (2016 edition) Change the sentence "Ontario introduced direct compensation for vehicle damage in June 1990, while similar direct compensation for vehicle damage came into effect in New Brunswick in January 2005." to: 2 6 "Ontario introduced direct compensation for vehicle damage in June 1990, while similar direct compensation for vehicle damage came into effect in New Brunswick in January 2005, Nova Scotia in 2013, Prince Edward Island in 2015, and Newfoundland and Labrador in 2020." Add "Newfoundland and Labrador" with a footnote to the first sentence under heading Risk Sharing Pools: "The Facility Association also manages risk sharing pools in Alberta, New Brunswick, Nova Scotia, Newfoundland and Labrador,1 and Ontario, which are established under the Plan of Operation." 10 7 Add footnote to page: "At the time of publication, the Facility Association and the Newfoundland and Labrador government are working to establish a new “all-comers” risk sharing pool. It will allow Newfoundland and Labrador drivers currently insured through the Facility Association, but not considered to be the highest risk, to be insured through the regular market while allowing insurance companies to share that risk with all insurers." C14 Alberta: Automobile Insurance—Part 1 (2017 edition) Add “Newfoundland and Labrador” to the first sentence of the paragraph above the Example box: 10 11 “Because of the direct compensation plans in effect in Quebec, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, and Ontario, rate groups are also in use…” Add "Newfoundland and Labrador" with a footnote to the first sentence under the heading Risk Sharing Pools: "The Facility Association also manages risk sharing pools in Alberta, New Brunswick, Nova Scotia, Newfoundland and Labrador,1 and Ontario, which are established under the Plan of Operation." 11 7 Add footnote to page: "At the time of publication, the Facility Association and the Newfoundland and Labrador government are working to establish a new “all-comers” risk sharing pool. It will allow Newfoundland and Labrador drivers currently insured through the Facility Association, but not considered to be the highest risk, to be insured through the regular market while allowing insurance companies to share that risk with all insurers." Remove the first sentence (“Newfoundland has a tort-based system of automobile insurance 12 14 operated entirely by private sector insurance companies”) under the heading Tort Insurance Plans. 16– 12 Remove the section about Newfoundland 18 13 1 Add “Newfoundland and Labrador” to the study title:

Newfoundland and Labrador Automobile Insurance Changes Legislative Update – Effective January 1, 2020

“Direct Compensation Plans: Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island Plans” Add “Newfoundland and Labrador” to the Learning Objective statement: 13 1 “For New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, …” Revise the last paragraph on the page: “Knock-for-knock laid the groundwork for modern direct compensation plans like those in New 13 3 Brunswick, Newfoundland and Labrador, Prince Edward Island, Ontario, Nova Scotia, and Quebec.” Replace the second sentence in the first paragraph under Direct Compensation for Property Damage: 13 4 “Ontario introduced direct compensation for vehicle damage in 1990, while similar direct compensation for vehicle damage came into effect in New Brunswick in 2005. Prince Edward Island and Newfoundland and Labrador have since adopted direct compensation systems.” Replace the first sentence of the paragraph at the bottom of the page: “To determine fault responsibility for the direct compensation of property damage claims, the 13 4 Driver’s Fault Chart is used in Quebec and Fault Determination Rules are used in Ontario, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, and New Brunswick.”

Add “Newfoundland and Labrador” to heading: 13 11 “New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island Plans” Add “Newfoundland and Labrador” to the first two sentences under the heading “Summary of Coverages”: In New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, Third 13 11 Party Liability is a mandatory coverage. The minimum required limit is $200,000 in New Brunswick, Newfoundland and Labrador, and Prince Edward Island, and $500,000 in Nova Scotia. Change the paragraph above the list: 13 11 “In New Brunswick, coverage under DCPD applies if the following conditions are met:” C14 Atlantic Provinces: Automobile Insurance—Part 1 (2017 edition) Change the sentence "'Knock-for-knock' laid the groundwork for modern “Direct Compensation” concepts (fully discussed later in the text) like those in Quebec and Ontario. New Brunswick also adopted a direct compensation scheme more recently" to: 3 4 "The knock-for-knock concept laid the groundwork for modern direct compensation concepts that underpin the direct compensation–property damage coverage included in the standard automobile policies in many Canadian jurisdictions." Change the sentence above the Example box: "This system is in place in New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince 3 6 Edward Island, Ontario, and Quebec." Remove the sentence about PEI. Add "Newfoundland and Labrador" to the first sentence: 3 7 "To determine fault or responsibility for DCPD claims, the Driver's Fault Chart is used in

Newfoundland and Labrador Automobile Insurance Changes Legislative Update – Effective January 1, 2020

Quebec, while Fault Determination Rules are used in New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island." Add "Newfoundland and Labrador" to the contents list for Section A.1 and in the table of 5 2 contents 5 7 Add "Newfoundland and Labrador" to the title at the top of the page Change the second sentence in first paragraph: 5 7 "Nova Scotia did the same in April 2013, Prince Edward Island in 2015, and Newfoundland in 2020." Add "Newfoundland and Labrador" to the paragraph at the bottom of the page: 13 10 "Because of DCPD in effect in New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and Quebec, rate groups are also in use…" Add "Newfoundland and Labrador" to first sentence: 14 7 "The Facility Association manages risk sharing pools in Alberta, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Ontario, which are established under the Plan of Operation." C14 Manitoba: Automobile Insurance—Part 1 (2017 edition) Add “Newfoundland and Labrador” to the first sentence of the paragraph above the Example box: 10 12 “Because of the direct compensation plans in effect in Quebec, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, and Ontario, rate groups are also in use…” Add "Newfoundland and Labrador" with a footnote to the first sentence under the heading Risk Sharing Pools: "The Facility Association also manages risk sharing pools in Alberta, New Brunswick, Nova Scotia, Newfoundland and Labrador,1 and Ontario, which are established under the Plan of Operation." 11 7 Add footnote to page: "At the time of publication, the Facility Association and the Newfoundland and Labrador government are working to establish a new “all-comers” risk sharing pool. It will allow Newfoundland and Labrador drivers currently insured through the Facility Association, but not considered to be the highest risk, to be insured through the regular market while allowing insurance companies to share that risk with all insurers." Add “Newfoundland and Labrador” to the study title: 13 1 “Direct Compensation Plans: Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island Plans” Add “Newfoundland and Labrador” to the Learning Objective statement: 13 1 “For New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island, …” Revise the last paragraph on the page: “Knock-for-knock laid the groundwork for modern direct compensation plans like those in New 13 3 Brunswick, Newfoundland and Labrador, Prince Edward Island, Ontario, Nova Scotia, and Quebec.”

Newfoundland and Labrador Automobile Insurance Changes Legislative Update – Effective January 1, 2020

Replace the second paragraph under Direct Compensation for Property Damage: “This system has been in place for a number of years in New Brunswick, Nova Scotia, Ontario, 13 4 and Quebec. The DCPD system recently implemented in Prince Edward Island and Newfoundland and Labrador is modeled after the systems in these provinces. Replace the first sentence of the paragraph at the bottom of the page: “To determine fault responsibility for the direct compensation of property damage claims, the 13 4 Driver’s Fault Chart is used in Quebec and Fault Determination Rules are used in Ontario, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, and New Brunswick.”

Add “Newfoundland and Labrador” to heading: 13 10 “New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island Plans”

Add “Newfoundland and Labrador” to the first two sentences under the heading “Summary of Coverages”: In New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, Third 13 11 Party Liability is a mandatory coverage. The minimum required limit is $200,000 in New Brunswick, Newfoundland and Labrador, and Prince Edward Island, and $500,000 in Nova Scotia. Change the paragraph above the list: 13 11 “In New Brunswick, coverage under DCPD applies if the following conditions are met:” 15 1 Rename the study to "Alberta" 15 1–7 Remove all Newfoundland content C14 Quebec: Automobile Insurance—Part 1 (2017 edition) Under the Direct Compensation heading, change the sentence: "Ontario introduced direct compensation for vehicle damage in June 1990, while similar direct 2 27 compensation for vehicle damage came into effect in New Brunswick in January 2005, Nova Scotia in 2013, Prince Edward Island in 2015, and Newfoundland and Labrador in 2020." Add "Newfoundland and Labrador" to the third paragraph from the top of the page: 10 11 "Because of the direct compensation plans in effect in Quebec, Ontario, New Brunswick, Newfoundland and Labrador, Prince Edward Island, and Nova Scotia, rate groups…" Add "Newfoundland and Labrador" to the first sentence under Risk Sharing Pools: "The Facility Association manages risk sharing pools in Alberta, New Brunswick, Newfoundland and Labrador,1 Nova Scotia, and Ontario, which are established under the Plan of Operation."

Newfoundland and Labrador Automobile Insurance Changes Legislative Update – Effective January 1, 2020

Change the sentence in the second paragraph from the top: "This system has been in place for a number of years in New Brunswick, Nova Scotia, Ontario, 13 3 and Quebec. The DCPD system recently implemented in Prince Edward Island is modeled after the systems in these provinces. Newfoundland and Labrador adopted this system in January 2020." 13 9 Add "Newfoundland and Labrador" to the title (after New Brunswick) Add "Newfoundland and Labrador" to the first sentence under the heading: 13 9 "The automobile insurance plans in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island are similar to the Ontario plan in many ways." Add "Newfoundland and Labrador" to the first paragraph: "In New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, Third 13 10 Party Liability is a mandatory coverage. The minimum required limit is $200,000 in New Brunswick, Newfoundland and Labrador, and Prince Edward Island..." Revise the second paragraph: 13 10 "In New Brunswick, coverage under DCPD applies if the following conditions are met:" Add "Newfoundland and Labrador" to the last paragraph: "Direct Compensation Property Damage coverage in New Brunswick, Newfoundland and 13 10 Labrador, Nova Scotia, and Prince Edward Island is modeled after Ontario’s DCPD coverage and responds to losses in much the same manner as the Ontario coverage." 14 1 Rename the study to "Alberta" 14 1–6 Remove all Newfoundland content C14 Saskatchewan: Automobile Insurance—Part 1 (2017 edition) Add “Newfoundland and Labrador” to the first sentence of the paragraph above the Example box: 10 11 “Because of the direct compensation plans in effect in Quebec, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, and Ontario, rate groups are also in use…” Add "Newfoundland and Labrador" to the first sentence under Risk Sharing Pools: "The Facility Association manages risk sharing pools in Alberta, New Brunswick, Newfoundland and Labrador,1 Nova Scotia, and Ontario, which are established under the Plan of Operation."

11 7 Add footnote to page: "At the time of publication, the Facility Association and the Newfoundland and Labrador government are working to establish a new “all-comers” risk sharing pool. It will allow Newfoundland and Labrador drivers currently insured through the Facility Association, but not considered to be the highest risk, to be insured through the regular market while allowing insurance companies to share that risk with all insurers." 13 1 Add "Newfoundland and Labrador" to the title (after New Brunswick) Replace the last paragraph on the page: “Knock-for-knock laid the groundwork for modern direct compensation plans like those in New 13 3 Brunswick, Newfoundland and Labrador, Prince Edward Island, Ontario, Nova Scotia, and Quebec.” Change the sentence in the second paragraph under Direct Compensation for Property Damage: 13 4 "This system has been in place for a number of years in New Brunswick, Nova Scotia, Ontario, and Quebec. The DCPD system recently implemented in Prince Edward Island is modeled after

Newfoundland and Labrador Automobile Insurance Changes Legislative Update – Effective January 1, 2020

the systems in these provinces. Newfoundland and Labrador adopted this system in January 2020." Replace the first sentence of the paragraph at the bottom of the page: “To determine fault responsibility for the direct compensation of property damage claims, the 13 4 Driver’s Fault Chart is used in Quebec and Fault Determination Rules are used in Ontario, Nova Scotia, Newfoundland and Labrador, Prince Edward Island, and New Brunswick.” 13 11 Add "Newfoundland and Labrador" to the title (after New Brunswick) Add "Newfoundland and Labrador" to the first sentence under the heading: 13 11 “Similar to Ontario, automobile insurance in New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island is provided entirely through the private sector.” Add "Newfoundland and Labrador" to the first paragraph under Summary of Coverages: "In New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, Third 13 11 Party Liability is a mandatory coverage. The minimum required limit is $200,000 in New Brunswick, Newfoundland and Labrador, and Prince Edward Island..." Revise the second paragraph: 13 11 "In New Brunswick, coverage under DCPD applies if the following conditions are met..." 15 1 Rename the study to "Alberta" 15 1–7 Remove all Newfoundland content C48: Automobile Insurance—Part 2 (2016 edition) Add “Newfoundland and Labrador” to footnote 5: “5. Under the Direct Compensation provisions of the Insurance Acts in Ontario, Nova Scotia, 7 217 New Brunswick, Newfoundland and Labrador, Prince Edward Island, and Quebec, the insureds’ property damage is paid by their own insurers to the extent that they are not at fault.” Add “Newfoundland and Labrador’s SPF4” to point 1: “Wordings for no-fault jurisdictions that include DCPD coverage (Ontario’s OAP 4, New 8 233 Brunswick’s NBPF 4, Newfoundland and Labrador’s SPF4, Nova Scotia’s NSPF 4, and Prince Edward Island’s PE – SPF 4)” Remove “Newfoundland and Labrador” from point 2: 8 233 “2. Wordings for jurisdictions with tort-based regimes (versions of SPF 4 used in Alberta and the territories)” Add “Newfoundland and Labrador” to the first sentence of the last paragraph under Direct Compensation–Property Damage: 8 240 “New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island have also subsequently brought in no-fault insurance regimes and DCPD coverage.” C110: Essentials of Loss Adjusting (2018 edition) Add "Newfoundland and Labrador" to the paragraph in middle of the page: "Automobile physical damage claims in Ontario, New Brunswick, Newfoundland and Labrador, 1 22 Nova Scotia, Prince Edward Island, and Quebec are settled according to direct compensation regimes, and…" Update the last sentence of the paragraph of point 1: 2 7 The Intercompany Settlement Chart applies to vehicle damage that does not exceed a specified dollar amount. The chart stipulates the percentage of responsibility placed on vehicle drivers in

Newfoundland and Labrador Automobile Insurance Changes Legislative Update – Effective January 1, 2020

certain accident situations. Signatories to the agreement must follow the chart when settling automobile claims that fall under it. Note that the chart rules are not binding on an insured. The chart does not apply in Ontario, New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, or Quebec, where fault determination rules are regulated under provincial law. In Exhibit—DCPD Versus Tort: 9 5 Move Newfoundland and Labrador to the DCPD column under New Brunswick In the first sentence under Direct Compensation-Property Damage, change to the following: "New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, Prince Edward Island, and 9 5 Quebec have systems of direct compensation–property damage (DCPD) coverage in place where ... while fault determination rules are used in New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island" Add "Newfoundland and Labrador" to the sentence at the top of page: 9 12 "In jurisdictions other than Ontario, Quebec, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, when an insured is not at fault and…" Add "Newfoundland and Labrador" to the second paragraph from top of page: "Under the direct compensation schemes in force in Ontario, Quebec, New Brunswick, 9 12 Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, the insured’s own insurer pays for…" Add "Newfoundland and Labrador" to the paragraph at the bottom of page: 9 14 "In Ontario, Quebec, New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, direct compensation agreements are provincially legislated for…" C111: Advanced Loss Adjusting (2009 edition) 4 5 Remove the section “Newfoundland” Add “Newfoundland and Labrador” to the heading: “New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island”

Revise the second paragraph: “In New Brunswick, Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, Third Party Liability is mandatory coverage. The minimum required limit is $200,000 in New Brunswick, Newfoundland and Labrador, and Prince Edward Island, and $500,000 in Nova Scotia. There is optional coverage available to increase this coverage limit to larger amounts, such as $1 million or $2 million. Uninsured Motorist coverage is mandatory in these provinces. 4 6 Accident Benefits coverage is also mandatory except in Newfoundland and Labrador.”

Revise the fourth paragraph: “In 2005, New Brunswick introduced mandatory Direct Compensation Property Damage (DCPD) coverage, which is very similar to the mandatory DCPD coverage in Ontario. Nova Scotia, Newfoundland and Labrador, and Prince Edward Island are quite similar to the New Brunswick plan and have modelled some conditions after it.”

Newfoundland and Labrador Automobile Insurance Changes Legislative Update – Effective January 1, 2020

C130: Essential Skills for the Insurance Broker and Agent (2019 edition) Add "Newfoundland and Labrador" to the bullet point: 9 11 "Direct compensation–property damage (in New Brunswick, Newfoundland and Labrador, Nova Scotia, Ontario, and Prince Edward Island)" Add "Newfoundland and Labrador" to the bullet point: "Direct compensation–property damage—Provides coverage in Ontario, New Brunswick, 9 19 Newfoundland and Labrador, Nova Scotia, and Prince Edward Island, under certain conditions, for damage to..." Add "Newfoundland and Labrador" to the first sentence under Direct Compensation-Property Damage: 9 34 "Direct compensation–property damage (DCPD) coverage is available in New Brunswick, Newfoundland and Labrador, Nova Scotia, Prince Edward Island, Ontario, and Quebec…" Change this bullet point: "In Ontario, Quebec, and New Brunswick, direct compensation– property damage (DCPD) coverage" to: 9 41 "Direct Compensation–Property Damage (DCPD) coverage for those jurisdictions where this coverage is mandated." C131: Advanced Skills for the Insurance Broker and Agent (2019 edition) In the chart, under Newfoundland and Labrador: 9 5 Change tort to "no-fault" and add "direct compensation-property damage" under third-party liability