An internal document from Alberta’s treasury board and finance department has recommended that the province implement a no-fault auto insurance system.
The document, which was obtained by Toronto Star, was compiled by actuary firm J.S. Cheng & Partners and insurance consulting firm Cameron & Associates Insurance Consultants, in consultation with representatives from the province’s treasury board and finance department. The report was conducted as part of a claims and costs study requested in 2018.
The report called for a no-fault auto insurance system, wherein policyholders and their passengers are given compensation by their insurer without proof of fault following an accident. However, a no-fault auto insurance system also means claimants cannot sue for pain and suffering from the auto insurance system. The system effectively replaces the right to seek recovery through the civil justice system for a benefits schedule.
According to the study, the root of Alberta’s insurance cost problems is the rising cost of settling injury claims in the province. The report found that individuals who have suffered at least one of the “top four” injuries – namely, Post Traumatic Stress Disorder, concussions, temporomandibular joint injuries, and whiplash-associated disorder with chronic pain lasting more than six months – are “more likely to be represented by a lawyer,” and that the percentage of claims from individuals with one or more of the injuries has gradually increased from 16% in 2010 to 30% in 2016.
The study also revealed that in 2017, pain and suffering comprised 57% of the money paid for bodily injury claims.
“The main cost driver within bodily injury claims is pain and suffering,” the study noted, adding that Albertans are “increasingly retaining legal representation to negotiate their compensation.”
“Our recommendation is that the system can be modified to make it easier for a claimant to make a claim without the time consuming and costly legal process.”
