Brokers say insurers are cracking down by denying full coverage or boosting rates
By · CBC News
Albertans with distracted driving convictions are finding it increasingly difficult to get full insurance coverage at reasonable rates, insurance brokers tell CBC News.
Edmonton driver Derek Johnson got a distracted driving ticket last year.
When he and his wife approached Action Insurance Group earlier this month to renew their insurance, they were told no companies were willing to offer Derek comprehensive and collision insurance.
“Sorry, I don’t have any other options with that conviction,” broker Adam Kluczewski said in a message to Miranda Johnson. “Companies are really cracking down on distracted driving. I even called a couple to see if they would bend and none of them will.”
Kluczewski and Action Insurance Group declined to comment on the situation.
“I think it’s a load of … nonsense really,” Derek Johnson said. “I just have one single ticket on my licence and it was a distracted driving offence, and insurance companies are telling me that they’re not going to give me full coverage.”
Collision insurance optional
In Alberta, legislation only mandates auto insurance companies to provide liability and accident benefits coverage.
Liability insurance covers damages or injuries a driver may cause to others. Accidental benefits covers injuries suffered by drivers and their vehicle occupants, giving them access to medical treatments.
Companies can choose not to provide collision and comprehensive insurance because they’re optional by law. Collision insurance covers damage to the driver’s vehicle when it collides with another car or object. Comprehensive insurance covers other damages, such as theft, fire and hail.
Although collision and comprehensive insurance are optional, it’s typically required if the car is financed or leased.
“If you’re not able to get full coverage comprehensive insurance … you can’t finance a vehicle, [because] you need full coverage on a vehicle,” said Ray Robichaud, CEO of Edmonton Auto Loans, which works with 20 lenders.
‘Having to turn people away’
Brokers help customers find the best deals on insurance by working with a selection of insurance providers. CBC News surveyed three insurance brokerages in Edmonton — Armour Insurance, MBS Insurance Brokers and HDF Insurance — to ask how drivers might expect distracted driving tickets to affect their ability to get insurance.
Of the three firms, two — Armour and MBS — said they’ve had to turn clients down for full coverage because of distracted driving convictions.
Robichaud said he worked for eight months with a client who couldn’t get a car loan. He had been denied comprehensive and collision insurance because of a distracted driving conviction and two accidents on his record.
Armour Insurance CEO Rob Marusin said it’s becoming more common for clients with convictions to be denied comprehensive and collision insurance.
Marusin said as “intermediaries,” his brokerage firm has had to turn some clients with convictions away. “It’s created a bit of a hard market for consumers,” he said.
He said companies that offer the optional insurance for high-risk clients might require them to pay up-front for the full year.
“We try and help everyone, but right now … we unfortunately are having to turn people away because they maybe can’t afford to pay the full premium for the year,” he said.
Impact of 5 per cent annual cap
Some brokers blame the trend on the five-per-cent cap on auto insurance rates implemented by the former NDP government in November 2017. The cap expired Aug. 31 and Alberta’s UCP government has said it will not be renewed.
“I think that was creating some problems for them, so this was one solution — albeit imperfect solution — but it was one solution that I believe some [companies] are undertaking,” said George Hodgson, CEO of the Insurance Brokers Association of Alberta.
Alberta Treasury Board and Finance said from Nov. 30. 2017 to Aug. 31 of this year, it received roughly 50 complaints related to availability of coverage. Of the total, three complaints were related to distracted driving.
“After annual rate increases were capped at five per cent in late 2017, we learned that some insurance companies were taking steps to limit their business as a way of minimizing their losses,” said Jerrica Goodwin, a spokesperson with the ministry. “As not all insurance companies are taking these steps, Albertans are encouraged to explore their options.”
15 to 25 per cent hike
Greta Gerstner, a customer service representative with MBS Insurance, said she got a distracted driving ticket in June 2017 after more than a decade with a clean record.
“I was just plugging my cellphone in at a red light and didn’t realize that you can’t have the phone in your hand for any reason while the vehicle was running, so I got the ticket,” she said.
When she went to renew her insurance and the conviction showed up on her driver’s abstract, Wawanesa Insurance increased her premiums by 15 per cent.
I was just plugging my cellphone in at a red light and didn’t realize that you can’t have the phone in your hand for any reason while the vehicle was running, so I got the ticket.– Greta Gerstner
“Loyalty does help because if I were new to them, they wouldn’t even offer me that coverage,” Gerstner said.
“Wawanesa says it specifically will not even offer you collision and comprehensive coverage if you’re new to them, if you have a distracted driving ticket. So for that financed vehicle, you’re out of luck.”
Distracted driving as a ‘major’ conviction
Other firms say insurance can go up by 25 per cent after a distracted driving conviction, depending on whether the insurer treats it as a major or minor conviction. If it’s minor, the increase is typically 15 per cent. If it’s major, the increase can be around 25 per cent, depending on the company and individual.
To be able to treat distracted driving as a major conviction, insurance companies must apply to Alberta’s Superintendent of Insurance and the Alberta Automobile Insurance Rate Board. A spokesperson for the board said most companies still treat distracted driving as a minor conviction. But some brokers anticipate that will soon change.
“They have analytics that point to the fact that if an individual has a distracted driving ticket, the likelihood of an accident is greater,” Belland said. “I’m sure their premise is … the odds of having an at-fault accident definitely goes up.”
Ten out of the 12 insurance carriers HDF Insurance works with treat it as a major conviction. But at MBS Insurance, only one out of six carriers treat the offence as a major conviction.
A spokesperson for the insurance rate board said the board doesn’t have the resources to analyze how many insurers are treating distracted driving as a major conviction.
23,000 distracted drivers in Alberta
After shopping around for weeks, Derek and Miranda Johnson finally got approved for full coverage by Sonnet Insurance Group.
Derek said with Sonnet’s quoted price, his premiums will increase by nearly 25 per cent. Another company, the Co-operators Group Insurance, quoted him $2850—nearly double his old rate.
“It’s just kind of surprising to me,” Miranda added. “This is basically how to limit people from getting insurance, and that would just force people to be driving without it, because there are so many people, especially nowadays, who get that ticket.”
Edmonton police say they have issued more than 5,200 distracted driving tickets so far this year. In 2018, they ticketed 7,739 distracted drivers.
Provincewide, more than 23,000 drivers were ticketed for distracted driving in the year ended March 31, 2019.
Source: CBC News