Auto insurance panel recommends Alberta adopt a private, no-fault system

·5 min read

A new provincial bureaucracy, not the courts, should deal with car crash injury cases, a government-appointed auto insurance panel recommends.

Saying there's no evidence the courtroom battles help injured patients recover faster, the three-member automobile insurance advisory committee recommends that Alberta ditch its tort system of insurance and adopt a private, no-fault insurance model.

Such major change would require the government to create a new, independent traffic injury regulator to handle claims and assess what benefits injured people should receive. It would be funded by industry and government.

"The committee concluded that due to poor health outcomes and continuous price instability resulting from the current Alberta model, it must be fundamentally reformed to properly serve the interests of traffic injured and insured motorists alike," said committee chair Chris Daniels.

It's an approach some critics say is too formulaic to serve crash victims well.

The panel also recommends the government legislate the use of winter tires during Alberta's colder months.

In its 536-page report, released Thursday, the panel said the average consumer with full insurance coverage would see a 9.4 per cent reduction in premiums if Alberta adopts the suggested model. Panel members also say rates would be expected to hold steady for three years, then rise no more than the inflation rate in the following years.

Short-term measures to address insurance costs

But Alberta's finance minister is reticent to take big steps immediately. Minister Travis Toews announced legislation Thursday to move on some, but not all of the panel's 37 recommendations.

In part, the interim steps are supposed to help stabilize rising auto insurance rates in the province, he said.

CBC
CBC

"Firstly to consumers, but also to all those in the industry, whether it's health-care professionals, the Alberta legal experts and certainly insurance stakeholders, we owe it to all Albertans to provide feedback on this report," Toews told reporters.

The minister tabled Bill 41, the Insurance (Enhancing Driver Affordability and Care) Amendment Act, on Thursday. The bill proposes changes Toews said should save the average driver about $120 per year, per vehicle.

However, the changes could limit the financial help available for people who sustain "minor injuries" in a collision. Should the legislation pass, treatment for any longer-term complications resulting from sprains, strains or whiplash would be subject to a $5,300 coverage cap for pain and suffering damages.

The bill would also allow dentists to become certified examiners who assess crash injuries, in addition to doctors.

Injured people would also have access to $1,000-worth of treatment by dentists, psychologists and occupational therapists.

Insurance companies could offer drivers more coverage options, such as pay-per-kilometre plans, should the bill pass.

Not-at-fault drivers could deal directly with their own insurance company to get damages paid for.

The bill would also limit the number of experts who could testify in court during injury claims lawsuits.

As for bigger changes to insurance regulation, Toews said the government must first do widespread consultation. He expects that process to start later this fall and stretch into early 2021.

Government will consider further steps by mid-2021, he said, but there's no pre-determined outcome.

"The committee make a compelling recommendation, in the recommendation in moving to privately delivered no-fault [insurance]," he said.

Government caving in to insurance lobbyists: Opposition

The Opposition NDP has been calling on the government to freeze insurance premiums until next year. They say insurance companies are turning profits, particularly during the pandemic.

NDP Service Alberta critic Jon Carson also said insurance premiums have escalated since the UCP government axed an NDP five-per-cent rate hike cap.

In the legislature on Thursday, Carson accused the finance minister of being bad at math and serving as a "mouthpiece" for backroom lobbyists.

According to the provincial lobbyists registry, there are currently 33 companies or associations registered to lobby the government about insurance.

"Do you get the harm that you caused my constituents and so many others who need to keep their cars on the road?" Carson asked Toews.

Toews said insurance rates are jumping in Alberta because the former NDP government didn't deal with the root of the problem — something he said his government will have the courage to do.

He said the Opposition wants publicly run insurance like B.C. or Saskatchewan. B.C.'s public insurer has been bleeding money in the last few years.

"The member's recommendations belong in a dumpster fire," said Toews.

Celyeste Power, western vice-president for the Insurance Bureau of Canada, said the government's bill is a good first step toward making insurance premiums more affordable for Albertans. She was pleased to see more coverage coming for additional health-care providers.

"The reforms introduced should help reduce or at least stabilize insurance costs, and really get at the heart of the issue of what's driving insurance premiums and putting pressure on insurance premiums," she said. "I think that's good news for drivers today."

The bureau doesn't have a preference for tort or no-fault systems, she said. Other jurisdictions have examples of both that run well or are problematic, she said.

It's important to balance fair health coverage with affordable premiums for all, she said.

She also said the 22 auto insurance companies operating in Alberta are not turning profits lately in the province.