January 30, 2023


The Number One Source For Business

No-fault auto insurance system would reduce premiums for Alberta drivers, advisory committee says as government tables new legislation

Moving to a no-fault auto insurance system would save most Alberta drivers 9.4 per cent in premiums, says a committee the government charged with improving the industry.

a man wearing a suit and tie: Finance Minister Travis Toews says he plans to do more consultations on potential changes to the auto insurance industry.

© Provided by Edmonton Journal
Finance Minister Travis Toews says he plans to do more consultations on potential changes to the auto insurance industry.

The recommendation is included in a 536-page report released Thursday by the Automobile Insurance Advisory Committee.

Alberta currently has the third-highest insurance rate in the country. The advisory committee, formed in 2019, says it found evidence that climbing premiums were caused by ever-increasing bodily injury loss costs.

“Since there was nothing in the system to control those increases, premiums would continue to rise over the long term and create an even more serious pricing problem,” the report says, adding that outcomes are improved when “delay, conflict, and the retention of duelling experts, were eliminated from auto insurance compensation systems and replaced with no-fault alternative models.”

According to the actuary who crunched the numbers, the current model could experience a 20.6 per cent premium rate increase between April 2020 and 2022 where as a no-fault system would see a reduction in premiums by 9.4 per cent.

Committee member Shelley Miller said the move to a pure no-fault system, where drivers make claims through their insurer regardless of who is at-fault, would mean injured people would receive early medical treatment and compensation for financial losses without the need to prove the fault was due to a negligent driver.

A redesigned regulatory oversight model, with new boards and tribunals would be created “for evaluating injuries and economic losses, automobile insurance rating and service provider performance standards,” she said.

Committee member Dr. Larry Ohlhauser said the proposed new model would create three categories of injuries — those that can recover with little intervention, those that are more serious and may require an emergency room visit such as a broken bone and lastly, catastrophic injuries.

Finance Minister Travis Toews won’t say whether the province will follow through with that recommendation, saying only that he plans to do more consultation.

“Because of the magnitude of that change, we believe it’s important to make the report available to Albertans to review and provide feedback on this key recommendation before final decisions are taken,” he said Thursday.

Toews said more details on the new round of consultations, led by government MLAs, will be released soon and he expects the government will have gathered all its information by mid-2021.

NDP Service Alberta critic Jon Carson said transitioning Alberta to a no-fault system would not be the right move because it removes the right to sue for fair compensation.

“We don’t agree with giving Jason Kenney, his new handpicked traffic injury regulator, the right to to set payouts when we know he’s beholden to industry, lobbyists and insiders,” he said.

“Albertans are being overcharged for their insurance, and have been calling on the government to help and today we have seen Jason Kenney and the UCP leave Albertans behind.”

The NDP have been pushing for a freeze on auto insurance premiums and said Wednesday that nationalized insurance would be better for taxpayers.

New legislation expands definition of minor injury

Toews tabled some proposed changes to Alberta’s Insurance Act in the legislature Thursday though Bill 41, the Insurance (Enhancing Driver Affordability and Care) Amendment Act, which received first reading. Nothing in that legislation touches on moving Alberta to a no-fault system.

If passed, Bill 41 would expand the definition of minor injury beyond sprains, strains and whiplash to include related injuries that do not create serious impairment. Officials offered few specifics, but said that could include some, but not all, concussions.

Carson said that is not acceptable given the potential long-term implications that can come with concussions.

Adding injuries to the definition of minor means those people will be entitled to a maximum of $5,296 in pain and suffering compensation in Alberta.

Bill 41 would limit the number of experts that can be used in automobile injury litigation for injury claims, allow pay-per-kilometre insurance, add dentists, psychologists, and occupational therapists as adjunct therapists under the diagnostic and treatment protocols regulation and allow for up to $1,000 in treatment by any combination of these health professionals.

Toews said the proposed changes would reduce costs in the system by approximately $120 per vehicle per year on average, relative to what they would have been paying otherwise, but it’s not clear whether drivers will actually see a reduction in their premiums.

[email protected]