An Alberta group advocating for fair auto insurance is out with a new report challenging the reasoning behind scrapping a rate cap that will now see some drivers paying nearly 30 per cent more for auto insurance this year.
Insurers have blamed climbing injury payouts for creating a “crisis” in the insurance industry, with companies claiming they were paying out more than they were bringing in through premiums. But an analysis by an actuary hired by Fair Alberta Injury Regulations found injury payouts have stabilized in the last few years and even started to dip in 2019.
“They’re not skyrocketing. They’re not significantly increasing from one year to the next. That’s been the case for (three) years now,” consulting actuary Craig Allen told Postmedia.
He acknowledges injury claims did climb between 2011 and 2016, but they have levelled out since then.
“I agree there has been a period of growth, but my interpretation is that period of growth has ended,” Allen said.
He also found that the previous rate cap was high enough to cover injury claims in the last few years, because the Automobile Insurance Rate Board’s (AIRB) allowed rate hikes accounted for claims increasing at a faster pace than what resulted.
“Allowable rate levels since late 2017 … provide more than adequate amounts for the estimated bodily injury claims costs that have subsequently emerged. For insurers that have kept up to date with their rate changes, further rate increases for bodily injury coverage appear to be unnecessary at present and for a period into the future,” Allen wrote in the report.
He said insurance companies and the AIRB overestimated the severity of injury claims, and so that left room to cover any higher costs the company faced.
Fair Alberta is skeptical of claims the industry is overburdened by claims costs, and the reason behind the provincial government’s decision to scrap the rate cap
“We don’t understand where the premier got the idea that personal injury claims are escalating out of control — that is not what this data shows,” he told Postmedia.
“There is not a crisis going on with bodily injury claims costs, and there is no need to take money away, or compensation away, from injured, innocent people to compensate for an industry that is saying that there is a problem.”
The group also says it expects insurers are claiming hardship ahead of lobbying for changes to consumer protection laws around injury compensation.
The Insurance Bureau of Canada (IBC) takes issue with the report’s claims bodily injury claims have stabilized.
“Data from the independent rate regulator’s actuary clearly shows a steep increase in bodily injury claims since 2012. It’s clear that the auto insurance system no longer works for Alberta’s three million drivers: it’s expensive and offers little choice. We hope that all groups, regardless of what stake they have in the situation, will come together and work with the government-appointed expert committee on auto insurance to work on fixes that are in the best interest of drivers,” Celeste Power, IBC’s vice president said in an email statement.
When reached for comment, the AIRB only pointed to a panel reviewing insurance in the province, and did not comment further on the report.
“The government is reviewing the current automobile insurance system to ensure automobile insurance is sustainable and available for all Albertans. The AIRB looks forward to the expert advisory committee’s report and recommendations,” reads a statement from the AIRB.
Jerrica Goodwin, spokesperson for the provincial treasury board and finance, said in an email statement the AIRB is in the best position to comment on its methodology.
“Our government is addressing the issues in the automobile insurance industry that the previous government wasn’t willing to. We have appointed an advisory committee to review the system and are committed to an automobile insurance system that is fair, affordable and accessible for Albertans,” she wrote.