Insurance companies in New Brunswick must offer motorists lower premiums by Aug. 15 or face stiff penalties, the province's Conservative government announced Tuesday in its first throne speech since the June 9 election.

Associated Press

FREDERICTON — Insurance companies in New Brunswick must offer motorists lower premiums by Aug. 15 or face stiff penalties, the province's Conservative government announced Tuesday in its first throne speech since the June 9 election.

Premier Bernard Lord, whose Conservatives barely hung on to power after they botched their handling of the insurance issue, said companies that fail to comply will have their rates automatically cut by a minimum of 20 per cent. Insurers caught violating the law could be fined up to $5,000 per policy-holder.

"We are here to defend the interests of the people of New Brunswick," Lord said. "That's what this bill does. It puts consumers first and it imposes new penalties that did not exist before, new obligations . . . that were not there before."

The insurance bill was introduced the same day as a brief throne speech, which opened the first session of the 55th sitting of the legislature.

The premier said the new rates will be made retroactive to July 1. The province had warned companies that if they didn't voluntarily file rate reductions by that date, it would bring in a law.

"This bill carries the stick of retroactive benefits for consumers as of July 1," said Lord. "If the rates are not reimbursed within 45 days then there are penalties that can be imposed on the companies."

Also, if a company decides to withdraw its auto insurance products, it must give the government six months notice or face a fine of up to $100,000.

Lord has said he's upset that only a few of the 70 insurance companies in the province have filed lower rates in response to the government's decision to cap awards for minor injuries at $2,500 - something the insurance industry asked for.

Don Forgeron, spokesman for the Insurance Bureau of Canada, said many companies are in the process of lowering their rates but they are mired in bureaucracy.

"The industry has been at the ready to file lower rates," he said in an interview Tuesday. "We've been caught in a process that wouldn't allow us to do so."

Liberal Leader Shawn Graham said his party would be offering amendments to the government's bill, although he wouldn't say what they might be.

"Simply put, the government has given up too much and received too little," Graham said. "The legislation as it exists currently does not facilitate the reduction of insurance premiums we feel can be achieved."

NDP Leader Elizabeth Weir said the bill would not lower the number of uninsured drivers on the road or make premiums truly affordable.

"It's insufficient to deal with the existing crisis that we have with insurance in this province today," Weir said. "The only thing that's going to solve that is the driver-owned insurance system. One way or another they're going to get dragged kicking and screaming to making public insurance for New Brunswick a reality."

The government's tough stand on insurance rates follows a hard-fought election campaign that was dominated by complaints over skyrocketing insurance rates.

In the past year, premiums have shot up 71 per cent on average in New Brunswick.

The provincial legislature is expected to sit for only a few days, with auto insurance being the main issue on the legislative agenda.

The premier said there will be no budget, but there will be an economic statement.

The two-page throne speech also outlined changes to legislative committees.

The current committees on health care and education will become full standing committees and the legislature will establish a special committee on wood supply.