Alberta insurance companies are attempting to lift a one-year freeze on auto premiums imposed by the provincial government.
“We’re not thrilled about that, simply because the cost of claims and the cost of doing business keep going up,” said Insurance Bureau of Canada vice-president Jim Rivait, whose group represents most insurance companies across the country. “When you freeze the revenue stream, that’s not a good thing.”
Last week, a frustrated Premier Ralph Klein froze insurance premiums for a year and told Medicine Hat Tory MLA Rob Renner’s review team to come up with some better ideas before an election in 2005.
Meanwhile, the IBC also pulled a proposed $4,000 cap on minor soft-tissue injury claims.
Klein put the proposed freeze before cabinet Monday. It’s expected to come up for approval in the legislature in the next few weeks.
But Rivait said the province’s plan to overhaul auto insurance, in wake of a New Brunswick election that almost cost Premier Bernard Lord his government, was too ambitious and too fast, because it turned the mandatory auto insurance system on its head within a few months.
“When the premier has something on his mind, he doesn’t have a lot of trouble getting it through cabinet,” said Rivait. “We’re making an effort to try and implore him with some alternatives that would make a freeze unnecessary.”
Rivait said the freeze affects 100 per cent of drivers, while only 10 per cent are experiencing difficulty with premium prices. He chastised Renner and finance ministry officials for refusing to listen to industry officials who were on the MLA’s review team. He said industry officials were not allowed to discuss pain and suffering awards or recommend changes, or discuss issues that might be considered government policy.
“It’s not been a very good process at all,” said Rivait.
He said IBC decided to scrap the $4,000 cap because, with the definition of minor injuries constantly changing, it would have been “useless.”
“So rather than have a cap that’s not worth anything, we would rather do some other things that we can gain claims-cost savings (from),” said Rivait. “That’s why it may appear as though we have a bit of a different tack going, because the way the cap was going, it was going to be of no use whatsoever.”
A victims’ rights group has praised the rate freeze and the IBC’s decision to scrap the cap. Mark McCourt, an outspoken Edmonton injury accident lawyer who acts as counsel for the Accident Victims/Insurance Policyholders Advocate, said his group and the IBC now agree more often than they disagree.
“If you get rid of that $4,000 cap, I think there is substantial consensus for solutions,” said McCourt. AVIPA has tacitly endorsed all 10 of the IBC’s proposals to revamp the system, including one that would compensate an accident victim who misses work for net wages instead of gross wages, ensuring that the victim could not benefit twice from a group plan insurer and a reckless driver’s insurer through a settlement.
“That’s an area of over- compensation,” said McCourt, referring to current rules that allow a victim to recover gross pay.
The IBC also proposed that the province impose a 25-per-cent deduction on compensation where the victim wasn’t wearing a seatbelt, curb aggressive lawyer advertising, cap the maximum percentage a lawyer can charge, and require mandatory mediation before a claimant can go to court.
“The lawyer groups are going to hate some of IBC’s suggestions, but I think the new IBC proposal will have widespread support from victims, consumers and Tory MLAs,” said AVIPA vice-chairwoman Cynthia Trzebaniak in a news release.
MLA Renner had proposed that compensation for all non-catastrophic injuries be capped at $4,000.
More serious injuries, including paraplegia, quadriplegia, brain injuries and burns, would have been exempt from the cap.
His plan also called for the province to set basic vehicle insurance rates, increase premiums for drivers who are at fault in accidents, and provide safe-driving discounts for each year of claim-free driving, to a maximum discount of 65 per cent.
Premium prices would no longer be based on age, gender and marital status, while drivers in Edmonton, the scene of more collisions, would pay slightly more than drivers in Calgary.
However, Klein said Calgary and Edmonton drivers must pay the same rates.
