Today, the Government of Newfoundland and Labrador announced plans to temporarily remove retail sales tax (RST) from home insurance in the province.
Following the announcement in the provincial government's budget presentation, Amanda Dean, Vice-President, Atlantic, Insurance Bureau of Canada (IBC), issued the following statement:
"IBC is committed to working with consumers and the government on the affordability and accessibility of insurance within the province. IBC supports any effort to save consumers money in these tough times, and we are especially in support of removing the RST. However, the decision to remove the RST effective immediately is the most costly way to do this.
Insurers want to work with the government to implement this tax break in a way that will truly benefit consumers. To do this effectively, IBC has asked the government to provide insurers with enough time to implement the change. It's important to insurers to make the necessary adjustments without incurring extra administrative costs that could be passed on to consumers and potentially negate any immediate savings.
This is not the first time the Newfoundland and Labrador government has imposed a tax policy at the expense of consumers. In 2016, the government abruptly reintroduced RST on auto insurance, only to remove it again a few years later. Both occurred without notice to the industry and with the expectation that it be implemented immediately. A challenging business environment has led to fewer companies in the market, making it more difficult for consumers to obtain insurance. A healthy insurance market benefits consumers by encouraging innovation, improved products and services, and competitive premiums.
While insurance companies will strive to process refunds and credits as soon as possible, we ask homeowners to be patient as companies deal with the administrative and technological challenges of complying with this abrupt decision. This will take time, and insurers will work as quickly as they can to make the required adjustments.
IBC has a long history of offering solutions to help consumers save money on insurance and would be happy to provide the government with tangible recommendations for improvements to the system."
