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Overview of Reforms
Changes to Alberta's auto insurance system will see good drivers paying
premiums comparable to other western provinces, new drivers and inexperienced
drivers paying significantly less than they did under the old system,
and people with minor injuries treated according to a pre-approved, direct-bill
process that aims to get them better as soon as possible.
Motorists with traffic violations and at-fault accidents will continue
to pay premiums that reflect their driving practices, ensuring that drivers
are personally responsible for the premiums they pay.
See information about:
Premiums
- Good,
experienced drivers are in the competitive market, paying premiums
that are comparable to other western provinces. They represent
approximately 80 per cent of the Alberta market.
- The other 20 per cent of drivers have premiums regulated
by the premium rate grid. These are new and less experienced drivers,
and drivers with poor driving records. These consumers may use the grid
rate calculator, on the Automobile
Insurance Rate Board website, to help determine their premium.
- More than 95 per cent of Alberta motorists – that is, all drivers
except those with driving-related criminal code convictions – received
a minimum five per cent reduction in compulsory insurance premiums effective
October 1, 2004. Premiums for good, experienced Alberta drivers
for mandatory auto insurance have been reduced by a total of 18
per cent since the reforms were introduced. The latest
reduction of three per cent (effective November 2006) was the result
of the second review of compulsory premiums by the Automobile
Insurance Rate Board. Premiums will remain competitive in
the future.
- The premium grid sets maximum premiums for compulsory auto
insurance — personal liability and property damage, or PL/PD, and Section
B no-fault accident benefits.
- The premium grid starts at an entry level that is significantly lower
than previous market rates for less-experienced drivers, and sets
discounts for drivers with clean records and surcharges
for drivers with at-fault claims and traffic violations.
- Each claim-free year lowers premiums by moving drivers down
the grid until after 10 years they reach the 50 per cent discount.
- Drivers on the grid with more than 10 years of clean driving pay
a maximum premium that is 50 per cent less than the entry-level
rate.
- After
15 years of experience, one at-fault claim would not push the driver's
premium above the lowest price of the grid.
- Rates for occasional drivers with less than 8 years of experience
are capped at 25% of the grid rate they would pay if they were the primary
driver. There is no charge for an occasional driver with 8 or
more years of experience.
- Both grid premiums and maximum market premiums were initially set
by government, then by the Automobile
Insurance Rate Board (AIRB), which includes government and consumer
representation.
- Insurance companies are required to file their optional coverage
rates with the government, so that these rates can be monitored
to protect consumers.
- A three-level process was established to resolve
consumer concerns with their premiums:
- consumer attempts resolution with insurance company;
- impasse taken to insurance ombudsman for recommendations;
- continued impasse taken to a new independent body, which can
send the dispute to arbitration.
- More information
about premiums and consumer
dispute resolution.
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Transition to the new system
- The more than 95 per cent of Albertans who did not have traffic-related
criminal code convictions either saw their premium reduced by five per
cent on the unexpired portion of their premium, or reduced to the new
grid rate, effective Oct. 1, 2004. Premiums for good, experienced Alberta
drivers for mandatory auto insurance have been reduced by a total of
18 per cent since the reforms were introduced. The latest
reduction of three per cent (effective November 2006) was the result
of the second review of compulsory premiums by the Automobile
Insurance Rate Board. Premiums will remain competitive in
the future.
- Insurance companies are required by the Government to compare a driver's
premium under their current rating program to a driver's premium on
the grid, and charge you the lesser of the two premiums. In most cases,
a driver's premium under their insurer's rating program is less than
on the premium grid.
- The all-comers rule, Fair
Practices Regulation, and the grid ensure consumers
have access to insurance.
- People that suffer minor injuries in collisions have access to a
new diagnostic and treatment system that will provide faster and more
effective services, and reduce their out-of-pocket expenses because
health care providers will bill insurers directly.
- Consumers who believe their premium was incorrectly calculated can
appeal to a consumer dispute resolution
process to have their complaint addressed.
- The Automobile
Insurance Rate Board was established to set rates charged through
the new grid and monitor rates charged for optional coverage.
- More information
about the transition to the new system
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Premium Freeze
- Premiums for both mandatory and optional coverage were frozen from
October 30, 2003 to September 30, 2005.
- Drivers at fault in collisions or who are convicted for driving offences
saw their premiums increase despite the freeze when their policy was
up for renewal.
- Drivers whose circumstances improved during the freeze, such as from
increased experience or time passed since a traffic offence, saw decreases
when their policy was up for renewal.
- More information
about premiums.
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Treatment and Injury Management
- A process for diagnosing
and treating sprains, strains and minor whiplash was developed through
consultations with the medical community.
- Treatments during the first 12 weeks for these injuries are pre-authorized,
helping ensure people injured in collisions get the treatment they need
as soon as possible without out-of-pocket expenses.
- Pre-approved treatment services include medical, chiropractic, physical,
massage, and psychological therapy.
- Early, effective treatment
of sprains, strains and minor whiplash is key to getting people
quickly back to health. The diagnostic and treatment process is focused
on the patient's quick return to normal health and activities.
- Even after receiving treatment under the process, injured people
continue to have access to their Section B coverage if necessary for
continued recovery.
- More information
about the diagnostic and treatment process
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Compensation
- Injured victims continue to be able to recover economic costs —
such as income replacement, business and farm income replacement, medical
costs, home care costs, personal care costs, and all other actual out-of-pocket
costs — from wrongdoers, and continue to have full access to the
court system.
- Persons with serious injuries continue to have full access to claims
for pain and suffering compensation.
- Persons with injuries classed as minor have access to general damages
for pain and suffering up to $4,000. They are still able to recover
damages for lost income, future income, medical and rehabilitation costs,
and any other out-of-pocket expenses from the wrongdoer.
- The definition of what constitutes a minor injury was developed in
consultation with organizations representing injured people, consumers,
health care providers (physicians, specialists, chiropractors, occupational
therapists, physical therapists, massage therapists, psychologists),
insurers and lawyers.
- The definition is based on the best available scientific literature
on diagnosis and treatment, including Canadian and international sources.
- More information about
injury compensation
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Coverage
Vehicle owners must continue to carry minimum $200,000 third-party
liability coverage.
- Drivers can select third-party liability coverage of $200,000, $500,000,
$1,000,000, or $2,000,000.
- This coverage protects the vehicle owner and driver for property
damage and bodily injuries for which they are legally responsible.
Vehicle owners continue to carry Section
B (Accident Benefits) coverage which provides benefits regardless
of fault to occupants of a vehicle who are injured in a collision.
- Section B benefits available for medical
and rehabilitation services to injured parties increased from $10,000
to $50,000. Coverage also includes:
- total disability benefits, and
- death, funeral and grief counselling benefits.
- As well, treatments for specific services are pre-approved up to
maximum amounts. If further treatment is necessary once the maximum
value has been reached, your insurer can ask for a medical assessment.
- Victims of collisions caused by another driver will continue to be
able to seek further compensation from the wrongdoer. Optional coverage
remains available for motorists who wish to supplement their basic insurance
with collision, comprehensive, or other coverage.
- More information
about coverage
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Consumer Protection
- In the case of disputes over whether an injury should be considered
minor, an independent certified examiner agreed to by the disputing
parties — or, if necessary, randomly selected by the Superintendent
of Insurance — provide non-binding recommendations based on the nature
of the injury, the treatment followed, the progress toward recovery
under those treatments, and the impact of the injury on normal activities
of daily living.
- Binding decisions can be pursued through the courts.
- More information about consumer
dispute resolution.
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Other Initiatives
- Standing Policy Committee recommended that a special MLA committee
be struck to ensure a smooth transition. This panel will report back
to the Minister of Finance in September 2006 on the reforms and whether
any changes are required.
- Another recommendation being made by SPC would allow public insurers
from other provinces to sell auto insurance in Alberta under the same
rules that regulate private sector insurers.
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