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NS cap 1 — IBC: Insurers cite business cycles in defending post-cap profits     © Thompson’s World Insurance News 2010. No reproduction without written consent.     The Insurance Bureau of Canada said it realizes that following the introduction of the cap on awards for minor auto accident injuries insurers reported robust profits in Nova Scotia.     But it questions the fairness of judging the industry’s profitability based on one or two golden years.     “Given the cyclical nature of insurance, any analysis of stability or profitability of the industry is best done over a range of years encompassing a full business cycle,” the bureau said in its submission to the review (outlined in part in Thompson’s February 22 edition).     “To suggest that the industry’s profitability should be measured based on the years immediately following the imposition of the cap on minor injuries is as misleading as suggesting that the industry’s financial health is reflected from results in the few years immediately before the cap.”     Independent actuarial firm of Oliver Wyman found that for the eleven-year period from 1997 to 2007, the average return-on-equity for the Nova Scotia auto insurance industry was an acceptable and competitive 12%.     “This level of return is in line with ROE benchmarks used by a number of provinces in assessing auto insurance companies’ rate applications, including Ontario, New Brunswick, and Alberta.”     The IBC is adamant that any alternative to the cap should not be applied retroactively. “Deeply rooted in the rule of law is the core principle that people must know what the state of law is at the time of their actions to be compliant with it.”     More on the cap from the Bureau and and an Ontario trial lawyer in our March 1, 2010 edition. If you are not a regular reader, click on Subscribe on the left hand side of the page to get it every week.        Thompson’s World Insurance News P.O. Box 1027,  Waterloo, Ontario,  Canada  N2J 4S1 Tel: 519-579-2500 Fax: 519-745-7321 mpub@sympatico.ca THOMPSON’S WORLD INSURANCE NEWS , Canada’s only independent weekly for p&c insurance professionals, has been the industry’s most trusted news source since 1988.