Alberta finance minister to find solutions for rising insurance costs
Alberta finance minister to find solutions for rising insurance costs | Insurance Business Canada
Motor & Fleet
Alberta finance minister to find solutions for rising insurance costs
Why he’s reluctant to adopt a no-fault system
Motor & Fleet
By
Mika Pangilinan
The Alberta provincial government has tasked its finance minister, Nate Horner, with finding ways to address rising insurance costs.
A mandate letter from the premier called on the minister to develop both short-term and long-term solutions to make home and auto insurance more affordable in the province.
Horner’s mandate comes as a temporary pause on auto insurance rates near its December 31 expiration date.
In January, Alberta implemented a year-long freeze on the approval of any new auto insurance rate increases while conducting a study on ways to alleviate premiums.
In an interview with CBC News, Horner acknowledged the mounting pressure within the rate system but refrained from revealing specific proposals under consideration.
“You’re basically giving up your ability to sue,” he told CBC News. “If you’re hurt in a way that will impact your life, for the rest of your life, is it worth it for you to have a little cheaper insurance now and not have that right on the other end, if you’re hurt in a major way?”
A previous panel appointed by Horner’s predecessor, Travis Toews, had recommended the implementation of a no-fault system in Alberta, suggesting that it could potentially lower premiums by a little less than 10% for drivers with full coverage.
Alternatives to no-fault system
Injury lawyers in the province have pushed back on the idea of a no-fault system, arguing instead for other reforms such as capping auto insurance profits.
“What we’ve learned from British Columbia is no-fault systems punish innocent accident victims and protect bad drivers from consequences,” said Owen Lewis, chair of the Alberta Civil Trial Lawyers Association. “The same thing would happen in Alberta. It would be an industry-friendly reform that would make an already profitable industry more profitable at the expense of consumers.”
A recent survey by advocacy coalition Fair Alberta Insurance Regulations (FAIR Alberta), which is supported by the Alberta Civil Trial Lawyers Association, found that 69% of Albertans believe insurance profits are too high, while 75% feel that more should be done to regulate windfall profits in the auto insurance market.
Three-quarters of respondents also expressed their support for legislation that would cap profits in Alberta’s auto insurance market at 7% per premium policy.
The average price of auto premiums in Alberta has surged about 25% from 2018 to 2022, according to the Insurance Bureau of Canada (IBC).
The recommendations included offering vehicle owners more insurance options and allowing them to waive compensation claims for minor injuries in exchange for lower premiums, while preserving the right to sue for major injuries.
The IBC also suggested reducing bureaucracy related to rate increase applications, eliminating the rate cap grid, and simplifying the process for insurance companies to deny coverage in cases involving evidence of fraud.
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