As noted in Guest Columns published last month in the Edmonton Journal and the Calgary Herald, for a limited time only the Alberta government is engaging in public consultation on the issue of auto insurance reform. Politicians in the governing party are well aware that fumbling this file could have dire consequences, and thus do not want to make a move that would be unpopular with the populace.
Insurance affordability is an important issue for Alberta motorists. On a directly related note, Alberta’s auto insurance industry is swimming in profits billions of dollars in excess of target benchmarks set by the Automobile Insurance Rate Board (AIRB), largely due to ill-advised actions of the United Conservative Party government during UCP co-founder Jason Kenney's reign of error. Soon after assuming office in 2019, the Kenney government scrapped the cap on rates vehicle insurers could charge consumers. The following year, Premier Kenney's Finance Minister Travis Toews passed legislation reducing compensation payable by insurers to victims of careless drivers. Consequently, the auto insurance industry's premium haul jumped from $5.4 billion in 2019 to $6.1 billion in 2021, and claims costs plummeted from $4.5 billion in 2020 to $3.65 billion in 2021, according to the Superintendent of Insurance.
Insurance lobbyists, including Kenney's former press secretary who is now CEO of the Insurance Bureau of Canada (IBC), want to divert attention from industry profiteering by falsely blaming excessive premiums on injured auto accident victims (plaintiffs) and on their lawyers' contingency fees. The truth is that an injury lawyer's percentage fee does not add one penny to insurance premiums and claims costs. Not once has an insurance adjuster or defence lawyer or judge, in assessing compensation payable to an innocent victim of a reckless driver, added to that amount plaintiff counsel's contingent fee. Furthermore, an injured car crash claimant bears the burden of proving on a balance of probabilities that the other driver was negligent and that the collision caused the plaintiff's injuries and other damages. If the plaintiff doesn't discharge that burden of proof, there is no payout.
After edging out Toews in the race to replace Kenney, Premier Danielle Smith led the UCP to victory in the general election a year ago. Unlike her predecessor in the Premier’s chair, Smith has long been a proponent of the legal rights of auto accident victims. Prior to entering provincial politics, Smith was a Calgary Herald columnist, writing in one article, “If insurance reform is going to work for regular Albertans, preserving the rights and interests of victims must be the starting point.” Premier Smith has been critical of some of the Kenney government's moves on the auto insurance file, for example the decision by the previous administration at the beginning of 2022 to implement a form of no-fault legislation on vehicle damage. Smith has said of that Direct Compensation Property Damage scheme, "I think we have to revisit that policy." The Premier's opinion on this issue is much appreciated by party members, who in a resolution passed at the most recent UCP AGM voted to repeal the asinine DCPD policy.
A week before last Christmas, Premier Smith's Finance Minister Nate Horner enacted an Order in Council enabling the AIRB to require insurers to refund Alberta motorists premiums collected in excess of the Board's target profit provisions (a potential rebate estimated by the Alberta Civil Trial Lawyers Association at nearly $2500 per household). Unfortunately, I am not aware of any Albertan who actually has received this welcome Christmas gift in whole or in part, despite the Honourable Minister's good intentions.
Earlier this spring, the government released an actuarial report identifying inflated insurance broker commissions as a significant driver of high premiums in Alberta. The report added that policyholders would save hundreds of dollars annually on their rates if the government replaced private insurance companies with one public auto insurance corporation. By way of comparison, the report said that IBC's putrid proposal would save Albertans less than a buck and a half per month on their premiums.
IBC's proposal (essentially that the UCP government grant reckless drivers immunity from civil liability for their innocent victims' general damages, rip rights away from Albertans, and then let the multinational, multibillion dollar insurance industry sell a severely corrupted, socialist-style no-fault version of those freedoms back to those of us willing and able to pay the ransom) should be a non-starter. Economist Jack Mintz has advised against Alberta limiting the tort rights of innocent injured car crash victims, noting that Ontario has privately delivered hybrid no-fault, and also "boasts" the highest auto insurance rates in the nation. Despite this, the insurance lobby’s biased bureaucrat buddies evidently are itching to fast-track radical “reforms” severely detrimental to innocent motor vehicle accident (MVA) victims. The insurance lobby's wettest dream is that bureaucrats bamboozle provincial politicians into turfing MVA tort law in favour of a reckless driver's paradise no-fault scheme, while still allowing private insurance companies to rake in an outrageous fortune in massively excessive profits on the backs of consumers rather than booting them out of Alberta and incorporating one monolithic public insurer.
Thankfully however, bureaucrats don't run the show: the buck stops with elected officials including Premier Smith, Finance Minister Horner, Justice Minister Mickey Amery (a lawyer who has a solemn responsibility to stand strong in support of Albertans' longstanding legal rights) and UCP co-founder Brian Jean, a lawyer and senior cabinet minister who has shown a keen interest in this important file. Our firm has been in touch with these four politicians numerous times over the past twelve months, sharing the wealth of our three decades of knowledge and experience on this subject and offering common sense solutions that would bring good Alberta motorists' premiums more in line with those paid by policyholders in the public insurance jurisdictions of our two neighbouring provinces, and so if the UCP government chooses to favour insurers over Albertans as it did during the Kenney administration, it will do so because it wants to, not because it has to.
That said, the government stresses that no decisions have been made as it considers possible solutions to help maintain affordable insurance premiums for good drivers while preserving injured Albertans’ rights to full and fair compensation for pain and suffering and other losses from companies that insure bad drivers. Albertans can provide input on this issue by completing a survey available on the government's website until June 26, 2024.
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