The province has started a survey in an effort to address Alberta’s high car insurance rates. But the questions in the online survey have at least one personal injury lawyer questioning the government’s motives.
Calgary personal injury lawyer Fred Litwiniuk is concerned about the notion of “no-fault” auto insurance coming to Alberta.
“It does seem to me like there might be bias in the survey toward a no-fault outcome,” Litwiniuk told the Calgary Eyeopener. “And I think that there’s maybe not a lot of understanding among the general public about what that really means.”
Litwiniuk says there’s more to the issue than lower insurance rates.
“The promise of lower insurance rates sounds really enticing to a lot of people, especially in tough economic times when people are struggling,” he said. “But the question is, what rights are we being asked to give up in order to get those lower rates?”
The Alberta government is undertaking a review of auto insurance, saying it wants to ensure the industry can remain viable and that drivers can get affordable coverage.
Litwiniuk says a no-fault system essentially takes away a person’s right to sue.
And the system would decide what parties owe, or what they would be compensated.
“The issue is, you’ve got insurance companies on the one side, they’re a self-interested party, and insurance lawyers … on the other side, frankly, are also self-interested parties. So who’s looking out for the injured person?” he said.
“When you have the right to sue, you’ve got you get the two self-interested parties fighting against each other, and they come to a great compromise in the middle that really doesn’t use up court resources or public resources.”
Full no-fault insurance reduces lawyers’ fees by reducing most “pain and suffering” lawsuits for strains, sprains and whiplash. Instead of going to court, each driver’s insurance company would handle the claim, assess medical costs and determine the pay out.
Litwiniuk points out that a no-fault system means more bureaucracy.
“I don’t believe most Albertans are in favour of more bureaucracy or the creation of a new government agency to deal with injury claims that are already being dealt with really well in the private sector,” he said.
“If you’re concerned that you don’t want to have an ICBC-style insurer or you don’t want insurance companies or the government to have sole discretion over what money you might be entitled to if you get injured in an accident, it’s important to take the time,” Litwiniuk said of the survey, which is available online until Friday.
NDP rate cap not renewed
Auto insurance rates in Alberta have been rising sharply over the past five years. The trend prompted the NDP government to cap overall rate increases at five per cent annually for each insurer, starting in 2017.
The UCP government did not renew the cap last August, and some drivers have since reported getting notices of steep increases of 12 per cent or more.
Finance Minister Travis Toews says the cap forced insurers to seek savings at the expense of drivers by, in some cases, refusing to offer critical protections.
“Under the cap, we had insurers getting squeezed … so Albertans were finding themselves with fewer and fewer insurance options,” Toews told CBC last December.
“We ultimately need to deal with the challenges that are leading to increased premiums … and present a reformed insurance system in this province that can serve Albertans well.”
A three-member committee has been asked to find solutions that work for all parties within the existing, privately delivered system.
Litwiniuk feels the survey is biased.
“I think that surveys are all about the questions that are asked, and I feel like there are some some key questions that are missing from this survey and I think if you asked Albertans if they were interested in having an ICBC-style public insurer that most Albertans would not be in favour of that.
“And I also think if you asked Albertans if they would like to give the power solely to insurance companies or to the government to decide exactly what compensation they were going to get after an injury, I also think Albertans would not be in favour of that.”
One of the survey questions, for example, asks Albertans which is more important to them: the right to sue or cheaper rates.
Can we not have both? Litwiniuk asks.
“I don’t think that it’s an either-or question on the table,” he said. “I mean, here in Alberta, we already do have some no-fault accident benefits, so we’re not a pure tort [at-fault] system. It’s not all in the courts and it’s not all no-fault. There is a blend in the middle that I think can be a really good option.”
Last December, Premier Jason Kenney said the government would use the “next six months to address out-of-control increases on personal injury awards.”
Those payouts contribute to driving up costs, which are then paid by customers through their premiums, he said.
Asked about a cap, Kenney said former premier Ralph Klein put one in place in 2004.
“We’re going to look at how to have a more effective control,” Kenney said. “Something like a no-fault insurance system, which maintains a reasonable control on the awards.”
In 2004, the Klein government put a $4,000 cap on soft-tissue injuries. In the four years that followed, auto insurance premiums dropped by about 18 per cent.
“It’s really tempting to give up your rights in the short term in return for the promise of lower insurance rates,” Litwiniuk said.
“But I think we can look across the country and see that those promises really don’t come true in other jurisdictions. I personally have never seen and no-fault system work well without a public insurer. In other words without the government providing auto insurance. And so I worry that the promise is not going to come true.”
Seeking a happy medium
The B.C. government has announced the provincial auto insurer will be moving to an “enhanced care” model in 2021, similar to what is commonly referred to as no-fault insurance, in an attempt to control rising costs.
Litwiniuk believes there’s a happy medium that will work better than no-fault.
“The bigger lessons are to be had probably from Ontario, where they have a sort of hybrid system where they have private insurance, but they do have a sort of no-fault system. And again, you know insurance rates are high there and actually claims are much higher than they are here in Alberta,” he said.
“I don’t think that people are aware that injury claims are actually on the decline here in Alberta, and that the intervention that we had in 2004 when there was a cap placed on on minor injury damages … that’s really had a good effect on keeping things out of the court system, getting people fair compensation. I think that the system that we have is very cost-effective.”
CBC reached out for interviews with any of the three chosen experts on the insurance committee, but none were available for comment.
The survey is available online at Alberta.ca, under auto insurance survey.
With files from Eric Rankin and the Calgary Eyeopener.