New report shows legal costs account for roughly 20% of premiums for mandatory coverage
EDMONTON, AB, Sept. 26, 2023 /CNW/ - A new report from consulting firm MNP shows that legal fees and other costs associated with lawsuits following collisions are having a significant impact on auto insurance premiums in Alberta.
MNP found that Alberta's auto insurance market faces the same challenges from inflation and supply chain disruptions as other jurisdictions across Canada. However, litigation costs stand out as a major cost pressure that is contributing to the premiums drivers pay in Alberta.
Key findings in the report include:
"Auto insurance premiums should help those injured recover following a collision, not line the pockets of personal injury lawyers," said Aaron Sutherland, Vice-President, Pacific and Western, IBC. "It's time drivers were given more control over their auto insurance and the ability to choose new product offerings that mitigate these costs and provide savings."
The vast majority of those injured in auto insurance collisions ? approximately 80% ? sustain relatively minor injuries. As highlighted by MNP, Alberta's one-size-fits-all approach to auto insurance leaves drivers no choice but to pay for these mounting legal costs. That's why reforming the auto insurance system, to give drivers the ability to choose new coverage options that avoid legal costs for minor injuries, is the best way to improve affordability moving forward. IBC has put forward a reform proposal that does this, and would reduce premiums by an average of $200 while doubling the amount of preapproved treatment and care to those injured in collisions.
"Alberta does not need to move to a full no-fault model like other jurisdictions - where drivers lose the right to sue - to address the legal costs facing our auto insurance system," continued Sutherland. "But something has to be done to mitigate the impact these legal costs are having on the premiums drivers pay. IBC's Enhancing Care & Expanding Choice proposal puts consumers first, by protecting the right to sue while also ensuring that those injured in collisions recover quicker and more fully."
To learn more about IBC's proposals to the Alberta government, including short-term measures that would reduce premiums by a total of $325, visit www.betterwaytosave.ca.
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 the property and casualty (P&C) insurance market in Canada. For more than 50 years, IBC has worked with governments across the country to help make affordable home, auto and business insurance available for all Canadians. IBC supports the vision of consumers and governments trusting, valuing and supporting the private P&C insurance industry. It champions key issues and helps educate consumers on how best to protect their homes, cars, businesses and properties.
For media releases and more information, visit IBC's Media Centre at www.ibc.ca. Follow us on X (Twitter) @InsuranceBureau or 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.
SOURCE Insurance Bureau of Canada
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