In 1974, the Canadian Bar Association passed a resolution still in place today: “Be it resolved that the right of an individual to recover general damages from the wrongdoer in motor vehicle accident cases and to have such right adjudicated in the courts is one of the most vital hallmarks of the Canadian system of justice.”
50 years later, that age-old right of citizens to seek remedy from the courts for wrongs perpetrated against them, a freedom dating back to the Magna Carta in the year 1215, is under attack by Alberta’s Treasury Board and Finance department, which once again is spending taxpayer dollars on yet another slanted study pondering how to rip rights away from Albertans and pad the plump profit margins of multinational, multi-billion dollar insurance corporations. Insatiable Insurance Bureau of Canada lobbyists (who've long been chummy with the TBF bureaucracy) have pitched a plot similar to the "no-fault with a bogus tort option" regime in place in our twin province to the east (where that horrific Humboldt auto accident occurred a few years ago), currently presided over by Saskatchewan Party leader (and notoriously negligent motorist) Scott Moe. Will Justice Minister and Attorney General Mickey Amery please stand up and fearlessly protect the longstanding legal rights of innocent Albertans injured by reckless drivers?
While no law says you are required to own an automobile, auto insurance is mandatory for owners of motor vehicles (in Alberta, around three million motorists owning approximately four million vehicles) precisely so that victims of negligent drivers can receive full and fair compensation from those at-fault drivers’ insurers for pain and suffering and other damages and losses caused by car crashes. Because Alberta motorists are required by law to carry liability insurance, the price of the premium is regulated by the Auto Insurance Rate Board (AIRB).
Unfortunately, marketplace meddling by the United Conservative Party government under the rule of Jason Kenney (who was intimately connected to top insurance lobbyists) has led to good drivers being overcharged, Albertans hurt by careless drivers being undercompensated, and auto insurers raking in unprecedented record-high windfall profits billions of dollars in excess of the AIRB’s target profit benchmarks. Specifically, as a direct result of the Kenney administration scrapping the rate cap in 2019 and enacting tort deforms in 2020, the average Albertan’s premium rose from $1407 in 2019 to $1587 in 2022, while claims costs per vehicle dropped from $1112 to $1005 during that same span (stats from the 2023 AIRB report). A "hot off the presses" 2024 Market & Trends report from the AIRB notes that by the middle of 2023, the average premium was up to $1636, with claims costs per vehicle plummeting to $960 (resulting in massive insurer profits thanks to a microscopic auto loss ratio of under 59%). Total premiums collected by Alberta auto insurance companies jumped from $5.4 billion in 2019 to $6.4 billion in 2022, while claims costs dropped from $4.3 billion in 2019 to $4 billion in 2022 (stats from Superintendent of Insurance reports). Evidently, any contention by IBC lobbyists and their biased beancounter bureaucrat buddies in TBF that auto insurance rates jumped because claims costs did likewise is unadulterated BS -- and our elected officials are well advised to label "rubber-stamping IBC/TBF's recommendations on this file" as "the FAFO option".
It’s time to cut the crap. Kenney is history, and the new sheriff in town (Premier Danielle Smith) actually has a clue (and has for over 20 years dating back to when she wrote this insightful article on the subject in the Calgary Herald). Our Premier knows that auto insurance rates should be reduced by keeping insurer profits in check, not by ripping rights away from Albertans and then letting us pay insurance companies a steep ransom to retrieve a corrupted version of those freedoms. Good drivers deserve rate reprieve, a return to the pre-Kenney era when Alberta auto insurance premiums were in line with the national average both as a percentage of after-tax income and in real dollar figures. But this issue isn't just about price: Albertans won't take kindly to a UCP government-imposed 10% off shoe sale where the catch is that you only get one shoe! The proper way to achieve the goal of lower premiums for policyholders with good driving records is not to gut the product and rob Albertans of traditional civil legal freedoms. The fair, obvious and sensible solution (which includes scrapping the insurance premium tax) is clearly set out in our previous blog post.
The prudent, popular plan outlined in our January 2024 blog post would readily achieve the objective of returning auto insurance rates to reasonable and stable levels for good Alberta motorists (while approximately 10% of the driving populace -- those with deplorable records on the road -- would deservedly see their rates rise), but as unelected TBF bureaucrats over the past two decades have proven themselves to be addicted to extracting from vulnerable Albertans a pound of flesh during these incessant tort deform forays so as to please their insurance lobbyist pals, here are some “B list” ideas to consider as well:
1. Reduce compulsory Section B medical expense benefits from $50,000 to $10,000 and total disability benefits from 104 weeks to 26 weeks, and permit auto insurers to sell optional excess Section B coverage (just as insurers can sell excess Section A liability coverage over and above the mandatory minimum and can sell consumers optional Section C collision coverage);
2. Legislate a waiver of Schedule C costs payable on motor vehicle accident (MVA) claims settled before a Statement of Defence is filed;
3. Most car crash claims resolve for figures at or below the minor injury cap, currently set at $6061 (indexed for inflation). De-index the cap and reduce it by 17.5% to $5000;
4. Prejudgment interest on general damages currently is set at 5.15% per year. Reduce that to zero. In other words, outright eliminate PJI on non-pecuniary damages;
5. Implement an automatic 25% contributory negligence reduction for failure to wear a seatbelt;
6. Incentivize through lower premiums the use of winter tires from November to March;
7. Increase penalties for traffic violations and for uninsured driving, and implement an insurance validation program to enable police to confirm drivers’ insurance status at roadside;
8. Codify a discount rate for future damage calculations so as to eliminate the necessity of obtaining expensive expert economist reports on each individual case;
9. Cancel or reverse the planned 2024 increase on the health care recovery levy; and
10. Slash bloated brokerage commissions and inflated insurance industry C-suite remuneration by one third. Enough already with this naked profiteering on the backs of consumers, brazenly masquerading as insurance industry “operational expenses”.
Finally, and most importantly, listen to Albertans on this important issue, including to the astute experts at FAIR Alberta.
Thanks very much for taking the time to become informed on this file, and should you have any questions or concerns with respect to the foregoing, please don’t hesitate to drop us a line. For over 30 years, our firm founder and principal counsel has advocated on behalf of innocent Albertans (mostly women and children) injured by reckless drivers, and 20 years ago was named by Alberta Venture magazine as one of Alberta’s 50 Most Influential People for his leading role in protecting injured Albertans from MVA tort deformers in the Insurance Bureau of Canada and the Finance Ministry of Alberta.