Nova Scotia is promising to cut auto insurance rates by an average of 20 per cent with a long-awaited plan that would place a limited cap on compensation for minor injuries.

Canadian Press

HALIFAX — Nova Scotia promised Wednesday to cut auto insurance rates by an average of 20 per cent with a long-awaited plan that would place a limited cap on compensation for minor injuries.

"After listening carefully to the issues faced by Nova Scotians, we've developed a comprehensive plan that meets their needs," said Ron Russell, the labour minister.

"The result is a strong, effective plan that addresses the heart of the problem and substantially reforms our insurance system."

The six-point plan would allow consumers the option of purchasing additional accident benefits.

Consumers would also be protected against future rate increases by a new rate-review mechanism.

The province would create the Nova Scotia Insurance Review Board to oversee all insurance issues. The board would conduct rate reviews and monitor the system "to ensure reforms are working for consumers."

A lobby group opposed to no-fault insurance vowed this week to make the pending Nova Scotia election "a one-issue campaign" if the province placed a cap on compensation for accident victims.

The Nova Scotia Coalition Against No-Fault Insurance opposes any limit on the right to sue for compensation over damages stemming from an automobile accident.

Premier John Hamm is expected to drop the election writ at any time and soaring auto insurance premiums are expected to be a major issue -- just as it was in neighbouring New Brunswick, where it almost defeated Premier Bernard Lord in the June 9 election.

A week after its close call at the polls, the New Brunswick government announced it will institute a $2,500 cap on payouts for minor injuries, effective July 1.

Since then, the four Atlantic premiers have agreed to study the issue to see if there can be a common regional approach to the problem of escalating insurance premiums.

Lord has suggested he will wait until for a premiers' report on the issue, due in September, before deciding exactly what he will do.

Quebec was the first province to introduce no-fault auto insurance in 1978, but Jean Charest's new government has promised to change the system to give accident victims the chance to sue criminally responsible drivers.

A recent Statistics Canada cost-of-living survey for the year ending February 2003 found that insurance costs had grown by over 50 per cent in all four Atlantic provinces.

New Brunswick led the nation with average increases of almost 71 per cent. Nova Scotia rates grew by 65.9 per cent; in Newfoundland and Labrador it was 63.8 per cent; while Prince Edward Island registered the smallest hike at 58.4 per cent.

The insurance industry disputes those figures, saying they're much lower, and blames the increases on the rising number of lawsuits over soft-tissue injuries.

Danny Graham, Nova Scotia's Liberal leader, has promised to cut rates by 15 per cent by putting a cap on compensation. Darrell Dexter's New Democrats oppose any form of cap on compensation.