No guarantee no-fault will have lower premiums

Albertans should be skeptical of claims that switching to a no-fault insurance system will save drivers money, says a provincial advocacy group.

On Thursday, the Alberta government released a massive report by the Automobile Insurance Advisory Committee. Top among its recommendations for improving the province's high insurance premiums was to move to a pure nofault system that would avoid the courts and set payouts for people injured in collisions.

The report claims that would save drivers 9.4 per cent on their premiums.

Alberta Finance Minister Travis Toews has said he won't be making the major shift without more consultations with Albertans.

Keith Mclachlin, a spokesman for FAIR Alberta, a group made up of medical professionals, lawyers and traffic injury victims, acknowledges that Alberta's premium rates are too high, but says other jurisdictions, in Canada and abroad show that maintaining a private insurance industry like Alberta's in a no-fault system does not lead to lower premiums.

Mclachlin said provinces such as Saskatchewan and Manitoba have a no-fault system and lower premiums, but in those cases the insurance is government-run.

“There is only one province that has a no-fault private insurance model and that's Ontario,” he said.

“And Ontario has the highest premiums by far and has had them for 15 years in all of Canada.”

Mclachlin said it's not uncommon for the actuaries who crunch the numbers to suggest that a no-fault system would save money. He said that doesn't translate when the plan is implemented in a private system because insurers will choose to keep any savings for themselves as opposed to passing them on to consumers.

“It might work well in a government system. Saskatchewan and Manitoba have some of the lowest premiums in the country. But that's because the model is completely different, you're not having it be privately operated.”

Mclachlin said FAIR plans to do its own math to show the government the potential impact of a switch over.

At the same time as the government released the committee's report, Toews tabled legislation that would make smaller changes to the insurance system though Bill 41, the Insurance (Enhancing Driver Affordability and Care) Amendment Act.

Mclachlin praised some of those changes, including allowing companies to offer per-kilometre rates, smaller bureaucratic changes that will save the system money overall and a promise to respect medical literature despite changes to how some minor injuries are handled.

For her part, Celyeste Power, vice-president of the Insurance Bureau of Canada's western region, said she is still reviewing the report and the “devil will be in the details” when it comes to whether a no-fault system could work to lower premiums in Alberta.

She acknowledged that Ontario, with its high premiums, is likely the closest jurisdiction Alberta has for comparison.

She said having some court options to deal with more catastrophic cases would be important as opposed to a complete one-sizefits-all model.