37% rate increases!! $4000 maximum soft tissue payouts in Alberta and only $2500 in NB. Now the opposition is asking for ICBC style insurance!! Goes to show we don't have it so bad maybe..........
Insurance industry seeking approval for hefty rate hike from Alberta drivers
Jim Macdonald, THE CANADIAN PRESS
EDMONTON - Alberta's failed experiment with a government-imposed cap on claims for minor injuries will come home to roost for drivers this week as the insurance industry seeks approval for a hefty rate hike.
A $4,000 cap on whiplash and other soft-tissue injuries was imposed in 2004 along with a new method of calculating rates, which saved insurers millions of dollars on injury claims and sharply reduced premiums for most drivers.
Notebooks: Don't pay for shipping
But in February, a Courts of Queen's Bench judged ruled that the cap violates the Charter of Rights. With the case headed to the Appeal Court in September, drivers have been left in limbo.
The insurance industry wants a 37 per cent increase in the mandatory portion of insurance, which includes basic coverage and third-party liability, but not collision.
For the average Alberta driver, this would work out to roughly $225 a year, because the mandatory portion of auto insurance is about 60 per cent of the total premium in most cases.
Two days of hearings are to start Tuesday in Calgary to determine whether the increase will be approved by the province's insurance rate board. If it is, the new rates will take effect in November.
But Alf Savage, chairman of the auto insurance rate board, says the increase being sought by the insurance industry is just one factor that will be taken into account in determining new premiums.
"We've come under considerable pressure for increases from the insurance companies due to the cap coming off," Savage said in an interview. "We have to make a decision and that decision could be anywhere from (the insurance industry's) 37 per cent to, perhaps, zero."
The rate review board hired actuary Oliver Wyman to do an analysis of the claims filed since the minor injury cap was put in place.
His report predicts a 29 per cent increase in future injury claims since the cap was struck down, which he estimates would require an increase of nearly 11 per cent in basic insurance premiums.
Savage says Wyman's report also notes several other factors that must be considered, including a downward trend in the total number of claims. He cautions against giving much attention to the 11 per cent figure.
"That figure is not really relevant," he said. "The board, in fact, almost becomes an actuary. It has to come up with some thoughts about where they see the market and the profits going, then make a decision on what the rates will be for the next year."
New Brunswick is currently wrestling with the same issue. A court ruling last year struck down the province's $2,500 cap on minor injuries, which cut payments to accident victims by $300 million and also brought down rates for drivers.
The New Brunswick government is appealing the ruling, but has already warned drivers that insurance rates could jump by $250 a year if the cap on minor injury claims is eliminated.
Jim Rivait, Alberta spokesman for the Insurance Bureau of Canada, says the legal wrangling has created a "highly uncertain time" for drivers buying auto insurance.
Rivait says the judge awarded the two Alberta women who filed the legal challenge $15,000 and $20,000 for soft-tissue injuries, far more than the $4,000 maximum under the cap.
"That's a significant increase in that portion of the claim," he said. "So you can't have any system that keeps increasing costs and doesn't have to be reflected in premiums."
Rivait says other insurance-related costs have also increased over the past year and this will also form the basis for the industry's bid for high premiums.
Rates for autobody shops have increased by as much as 50 per cent in Alberta's booming economy, with drivers often forced to wait weeks or even months for needed repairs.
The insurance industry suspects that a large number of accident victims may be holding back their injury claims until the Appeal Court makes a ruling, said Rivait.
"These are the kinds of things we have to discuss during the hearing."
Alberta's opposition parties have been pushing the province to adopt public auto insurance, which has been offered for years in British Columbia, Saskatchewan and Manitoba.
NDP Leader Brian Mason believes Alberta drivers would save hundreds of dollars per year if the province switched to public insurance.
"The insurance industry is making billions of dollars in excess profits, primarily from sky-high auto rates," said Mason. "I don't believe the private auto insurance system is working for Albertans."
But Rivait says public insurance rates in B.C. are higher than those in Alberta, while no-fault auto insurance in Manitoba and Saskatchewan has much tighter rules for injury claims.
"There is no ability (under no-fault plans) for someone in a collision to get an award for pain and suffering or even for wage and income beyond a certain amount."