The government of Newfoundland and Labrador has introduced a 15% retail sales tax on home, auto and business insurance policies, as stated in its recently approved provincial budget.
As of July 1, 2016, all new and renewing insurance policies will be subject to the new tax. Additionally, the existing tax on insurance premiums will be increased by 1%.
"This is a tax and not an increase on insurance premiums," said Amanda Dean, Vice-President, Atlantic, IBC. "Knowing the financial strain this will add to Newfoundlanders and Labradorians, customers are encouraged to talk to their insurance representative about options that might be available such as discounts for combining home and auto coverage, or for having security and safety features."
The IBC encourages customers to contact their insurance representative for any questions about their insurance policies.
Another challenge facing Newfoundland and Labrador is the rising number and cost of auto insurance claims. Between 2004 and 2014, the average cost of claims per vehicle rose by 41%, compared to 20% in New Brunswick, 10% in Nova Scotia and 0% in Prince Edward Island.
The property and casualty insurance industry is expecting to review the auto insurance product of NL to find a way to relieve the costs burden on the driving populace.
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