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Alberta's Auto Insurance System -

July 11, 2013

The Alberta government completed an overhaul of Canada's auto insurance system in 2004, making insurance more accessible to young drivers with clean records. Today, auto insurance premiums are a lot more affordable, however many aspects must be factored in.

What Caused The Savings?

For several years, many Canadian insurance companies where struggling along, barely breaking even. Auto insurance companies were especially hard hit. In 2003 and 2004, the insurance industry started to make a comeback after several years of difficulties, helping everyone financially. Once the companies were financially solvent, it made for a more competitive industry which resulted in lower insurance rates as more companies competed against each other for customers. This is partially responsible for dropping auto insurance premiums in Alberta.

Prices have also dropped due to certain changes made by the government in the way claims are paid. These changes reduced the money companies paid out of pocket.

Get Healthy Faster

Usually injuries sustained during car accidents are pretty minor. However, if those involved do not get proper medical attention, including diagnosis and treatment, these injuries can be drawn out. This can result in missing work or the continuation of ineffective treatment. When this happens, it causes the insurance company to lose money since these companies must not only fund treatment that isn't working, but they must also reimburse the victims for the time they miss at work.

Originally, these minor injuries could have been diagnosed and treated in a number of ways. Some of these methods weren't as effective as others. However, there are now years of research in medicine which sets new standards and creates new techniques for diagnosing and curing these little injuries. Because of this, residents of Albert who suffer minor injuries due to car accidents are more likely to be treated using proven methods. When a standard is set, it removes the need for the insurance company to sign off on the method before the patient undergoes treatment. Receiving treatment that has been proven time and again allows accident victims to get their lives back to normal. This way, premiums are no longer used to pay for treatment that doesn't work or to reimburse accident for more time taken off than necessary and everybody wins.

Capping Amount of Money Awarded for Minor Claims

Court awards for pain and suffering may no longer exceed $4,504. Reducing the amount awarded for minor claims keep premiums low, but allows victims of major accidents the money they need to get back to their lives. This $4,504 limit is only applicable to minor injuries and the injuries must be determined minor by an objective third party. However, this cap does not apply to reimbursed wages or the costs of rehabilitation. The Alberta Court of Appeals decided that the cap was valid and does not discriminate in any way. Personal injury lawyers must decide if they will appeal the decision to the Canadian Supreme court by September 2009.

At one time, something as simple as sprain could have resulted in the patient suing for pain and suffering awards of anywhere from $20,000 to $50,000. This may have made the victim happy, but everyone else was paying for it with higher insurance payments.

Who is Saving Money and How Much?

In the customer's view, the biggest change the auto insurance industry has sustained seems to be the Grid Rating System that sets the maximum premium. This is determined based on a chart that factors in the individual's driving record and the auto insurance required by law. Insurance agency may charge less than the grid determines fair, but they may not charge more. There is also a new law that dictates insurance agencies may not refuse basic coverage to anyone. Between all of this, it is easy to see the distribution of savings to the consumer.

However, these new laws have had some unfortunate effects as well. For example, capping the amount of premium that can be charged and insisting that high-risk drivers be allowed at least basic insurance results in poor drivers no longer being required to pay as much as their driving record indicates is fair. Meanwhile, safe drivers are being required to pay higher premium than they should. On the bright side, everyone's premiums should go down at least a little, but the good drivers aren't getting what's fair. The government and the auto insurance companies will need to continue to work together adjusting the grid to ensure that good drivers are not being penalized for their safe driving habits.

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