Alberta revamp only a start, IBC vp says

THE RECENT clarification of Alberta’s minor injury regulation is a positive step in improving the province’s deteriorating auto insurance system — but the battle to reverse the trend is far from over, the Western vp of the Insurance Bureau of Canada says.

As of June 1, Alberta’s minor injury regulation applies to sprain, strain and most whiplash injuries, and limits damages for pain and suffering from those injuries if they don’t result in serious impairment.

Bill Adams said the bureau had been asking the current government and the preceding one to make this clarification for the past four years.

“We have been calling for this . . . to deal with disturbing claims cost trends that we’ve seen emerged six or seven years ago,” he said.

“So we were relieved to see that government finally moved to clarify the original intent of the minor injury regulation.”

Mr. Adams said that in recent years some minor injuries were not being captured by the regulation, leading to a rise in bodily injury claims costs and putting pressure on insurance premiums.

The average BI claims cost is predicted to increase to $86,000 annually by 2019 — a hike of more than 100% in eight years.

And it is unclear how — or if — the regulation amendments will temper the situation.

“We are currently doing a review of it to determine how effective it is likely to be,” he said. “But the real implications of it likely won’t be known for a couple of years or more.”

He said it is disconcerting how long it took the government to address this and that its only impetus was that the regulation was expiring.

“When it takes government four years to make a clarification of a regulation, that is not breaking any speed records,” Mr. Adams said. “Meanwhile, claims costs are allowed to escalate year over year and that creates a problematic situation for Alberta
drivers —ultimately it’s the drivers who will pay.”

He said the Alberta government’s lukewarm approach to address the province’s auto insurance issues doesn’t bode well for the future.

The IBC started alerting the government to unfavourable auto insurance market trends four years ago and asked for a government-led closed claims study.

After a year of consideration the government declined to do the study so IBC went ahead with it.

The bureau asked for government input but didn’t receive it, he said.

“Yet when we released the results then it was criticized.

“There needs to be a shared responsibility by the industry, government and legal community and others to understand that if an auto insurance system is to be healthy in providing benefits and stable premiums . . . it has to be attended to on a regular basis, not reforms made in crisis and then forgotten until the next crisis.”

Meanwhile, the recent minor injury regulation amendments removed the regulation’s expiry date and instead the government has promised to review it as needed.

Mr. Adams said this compounds other issues such as the recently imposed rate increase cap of 5%.

He said the cap, brought in by ministerial order in December, was made retroactive to Nov. 1, 2017 through Nov. 1, 2018, but whether or not the cap will be removed then remains to be seen.

“Government has given indication that they will likely extend that rate cap . . . which makes it exceptionally problematic in an environment where claims costs continue to escalate,” Mr. Adams said.

He said last year’s fourth-quarter results indicated that insurer profits are suffering because of the cap. The province’s top 12 insurers, representing 98% of the market, posted combined ratios between 101% and 129%.

The IBC also wants the government to change the date on which pre-judgment interest rates start to accrue. Mr. Adams said it is now based on the date of collision; the IBC wants it based on the day a claim is made.

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