Auto insurance reports confirm legal costs are key driver of auto insurance premiums in Alberta
Competitive market best positioned to deliver improved affordability for drivers
EDMONTON, AB, April 26, 2024 /CNW/ - Today, the Alberta government announced a consultation on auto insurance system reform, releasing two reports that examine potential options. The reports are from consulting firms Oliver Wyman (OW) and Nous Group. Following the release of the reports, Aaron Sutherland, Vice-President, Pacific and Western, Insurance Bureau of Canada (IBC), issued the following statement:
"Alberta's private auto insurers are ready to work with the government to deliver change that improves the affordability of auto insurance and the quality of care provided to those injured in a collision. With significant cost pressures continuing to mount, there are important decisions that need to be made to ensure the sustainability of the auto insurance market moving forward.
The reports released today provide further evidence of the enormous financial impact that litigation costs and legal abuse are having on the auto insurance premiums that drivers pay. While IBC has concerns over significant omissions in OW's actuarial analysis, the government now has further proof from an independent third party that the best way to deliver savings to Alberta drivers is by getting legal costs under control.
The Nous report also drives home the devastating impacts of moving to a government-run insurance monopoly. The evidence is undeniable. It would be an economic boondoggle that would kill thousands of stable, private sector jobs. Taxpayers would be forced to pay billions of dollars to subsidize auto insurance premiums, while drivers would be deprived of the benefits of choice in a competitive market. Establishing a government-run monopoly would also take years and jeopardize the government's fiscal plan in both the near and long term. These significant negative consumer and economic impacts are why no North American jurisdiction has moved to a public auto insurance system in more than 50 years.
Given the negative impact of government-run auto insurance, it is unfortunate that more viable solutions to reform Alberta's auto insurance system were not explored in OW's actuarial analysis. IBC has compiled a list and description of the errors in the OW report.
Albertans agree that the auto insurance system requires urgent reform. IBC has put forward its Enhancing Care & Expanding Choice proposal to the government as a solution that would give drivers more control over their coverage and the ability to save by choosing new coverage options, while doubling benefits to those injured in a collision. Combined with regulatory and tax improvements, this proposal could save drivers an average of $325 annually on their auto insurance, and will not cause irrevocable damage to Alberta's economy.
Alberta's property and casualty industry, along with the 17,000 insurance professionals that live and work in communities across the province, are ready to assist the government as it undertakes meaningful reforms that puts drivers first and brings long-term stability to the auto insurance market."
Oliver Wyman Report Backgrounder
Public Auto Backgrounder
Enhancing Care & Expanding Choice Reform Proposal
Established in 1964, Insurance Bureau of Canada (IBC) is the national industry association representing Canada's private home, auto and business insurers. Its member companies make up the vast majority of Canada's highly competitive property and casualty (P&C) insurance market.
As the leading advocate for Canada's private P&C insurers, IBC collaborates with governments, regulators and stakeholders to support a competitive environment for the P&C insurance industry to continue to help protect Canadians from the risks of today and tomorrow.
IBC believes that Canadians value and deserve a responsive and resilient private P&C insurance industry that provides insurance solutions to both individuals and businesses.
For media releases, IN Focus articles, or to book an interview with an IBC representative, visit ibc.ca. Follow us on LinkedIn, X and Instagram, and like us on Facebook. If you have a question about home, auto or business insurance, contact IBC's Consumer Information Centre at 1-844-2ask-IBC. We're here to help.
SOURCE Insurance Bureau of Canada
Media Contact: Brett Weltman, Manager, Media Relations, IBC, [email protected]
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