PACICC Board makes inflation adjustment for personal lines benefit limits

First-time implementation of new inflation-protection policy

Toronto, ON (May 2, 2024) – The Board of Directors of the Property and Casualty Insurance Compensation Corporation (PACICC) approved a first-time implementation of its new inflation-adjusted limits for Personal Property and Automobile lines of business at its April 11 Board Meeting. The idea of incorporating inflationary adjustments into benefit limits was the subject of an industry consultation in the Summer of 2023, where it received strong support. The principle was approved by the PACICC Board in November of 2023 and regulatory approval of the changes to PACICC’s governing Memorandum of Operation received the required unanimous support from regulators in all 13 Participating Jurisdictions (10 provinces and three territories) on March 4, 2024.  The changes will take effect on Canada Day – July 1, 2024.

Says Dave Oakden, newly-elected Chair of the PACICC Board of Directors, “PACICC is a policyholder protection mechanism and the decision to reflect the impact of inflation in our personal lines benefit limits is an important step forward in our larger modernization agenda.  It is good news for consumers and is strong evidence of the customer-focus of Canada’s home, car and business insurance companies.”

He continued, “Limits were first set in 1989, when we were founded, and have only been adjusted a few times in the decades since.  We last undertook a comprehensive review of coverage and benefits as our Priority Issue for 2019, but those adjustments only really caught up for inflation.  Last year, PACICC staff initiated a major research project incorporating more than 750,000 anonymized claims files from Member Insurers, representing 80%+ of the Canadian P&C industry.  The objective was to fully understand the scope of current coverage and the impact of inflation on our levels of consumer protection.  Staff also undertook an exhaustive stakeholder consultation process with consumers, brokers, Member Insurers, IBC and the Canadian Council of Insurance Regulators before tabling their final recommendations for Board consideration last Fall.  We are gratified to see all of that hard work pay off in formal approval of these significant changes.”

Key changes approved by the PACICC Board include:

Claims Limits

• Personal Property limits increased to $520,000
• Automobile limits increased to $415,000

Periodic Review

• Commercial limits will be the subject of regular review every five years

Says PACICC CEO Alister Campbell, “All Canadians have felt the impact of inflation over the last several years and Canadian insurers have also experienced the consequences in the rising cost of claims.  The strong support shown by our Industry Members in supporting this move to embed inflation adjustments in our personal lines limits is a good-faith signal to all Canadian consumers.  It should provide all policyholders with an added sense of comfort that Canada’s property and casualty insurance industry is there to protect them, even in the worst-case scenario of an insurer insolvency.”

About PACICC

PACICC is the industry-funded, non-profit resolution authority for Canada’s Property and Casualty (P&C) insurance industry. PACICC’s mission is to protect eligible policyholders from undue financial loss in the unlikely event that a Member Insurer becomes insolvent. The Corporation works to minimize the costs of insurer insolvencies and seeks to maintain a high level of consumer and business confidence in Canada’s P&C insurance industry through the financial protection it provides to policyholders. For more information, visit www.pacicc.ca.

SOURCE: The Property and Casualty Insurance Compensation Corporation (PACICC)

Tags: benefits, personal lines, Property and Casualty Insurance Compensation Corporation (PACICC), Property/Casualty (P&C) insurance