How lawsuit costs impact auto insurance in Alberta

How lawsuit costs impact auto insurance in Alberta | Insurance Business Canada

Motor & Fleet

How lawsuit costs impact auto insurance in Alberta

New nationwide record set

Motor & Fleet

By
Terry Gangcuangco

Lawsuits and legal fees tied to auto insurance claims in Alberta are continuing to rise, contributing significantly to the high cost of coverage, according to new data.

Statistics from the General Insurance Statistical Agency (GISA), which operates under the oversight of provincial insurance regulators, reveal that the average cost of legal settlements for auto insurance in Alberta surpassed $100,000 in 2023 – a record high in Canada.

Over the last decade, the cost of auto insurance settlements in the province has jumped by 116%, based on GISA’s findings. As a consequence, Alberta drivers are now paying more than three times the amount that drivers in other Canadian provinces pay to cover legal fees and litigation expenses related to collisions.

“We need to have an honest conversation about why premiums are increasing and what can be done about it,” stated Insurance Bureau of Canada (IBC) Western and Pacific vice president Aaron Sutherland (pictured).

“It’s critical that those injured in a collision receive the benefits they need to recover. But personal injury lawyers are increasingly using aggressive marketing tactics and advertising to encourage collision victims to make frivolous claims. These claims affect the cost of auto insurance for all Albertans.”

A recent study conducted by professional services firm MNP echoes these trends, noting that between 2018 and 2022, the frequency of lawsuits after a collision increased by 48% and litigation costs related to collisions exceeded $1.2 billion.