News Release - Auto insurance reform on track for implementation in 2004

Reform package will bring competitive rates, fairness for good drivers regardless of age, says Nelson

Edmonton… The Alberta government is on track to bring in substantial changes to the province’s auto insurance system in 2004, including fair and competitive rates for all safe drivers, and fair compensation for those injured in accidents.

“Many Albertans told our government their insurance premiums were too high and rising too rapidly even though their driving records were good. Our reform package will fix that,” said Finance Minister Patricia Nelson, reflecting on the progress made during 2003 in planning insurance changes.

“Working with the insurance industry, our plan will address the rising cost of insurance premiums,” said Nelson, “while at the same time maintaining a competitive insurance system that offers choice to insurance customers and freedom to pursue fair settlements for injured drivers.”

Nelson said the government made significant progress on reforming the automobile insurance system in Alberta in the last year. The reform process began December 2002 with the release of a discussion paper on automobile insurance. Alberta Finance received further input from Albertans through a public opinion survey conducted in June 2003. The survey shows a majority of Albertans were concerned about insurance premiums, but were divided on how to fix the problem.

“When caucus met in July, we took what Albertans told us and developed a ‘made in Alberta’ solution to reform automobile insurance based on principles of accessibility, affordability and fairness,” said Nelson. “The Automobile Insurance Implementation Team spent the summer developing a framework that reflects those basic principles and included further consultation with consumer groups, insurance industry representatives and the legal community.” The auto insurance reform framework, along with a rate freeze on auto insurance policies that are renewed on or after October 30, was approved in the fall session of the legislature.

Nelson said there are still a number of issues to be resolved before the new rate structure is implemented. Work continues on defining what constitutes a minor injury. Once the definition is in place, an independent actuary will conduct another analysis of potential savings for consumers before the rate structure is finalized. The government will continue to work with the industry to ensure a smooth transition, and Nelson says the government is on track to implement the new system in the coming year.

Edmonton…The process to reform automobile insurance in Alberta began in 2002. The following lists the government’s progress on implementing a new system for automobile insurance that rewards safe drivers of all ages and ensures those injured in motor vehicle accidents are fairly compensated.

December 2002 - Alberta Finance released a discussion paper on automobile insurance.
January 2003 – 60 stakeholders respond to the discussion paper, including the Alberta Civil Trial Lawyers’Association, Canadian Bar Association, Insurance Bureau of Canada and the Independent Insurance Brokers’ Association of Alberta.
February 2003 - Feedback on the discussion paper was used to draft Bill 33 for the spring session of the legislature. Bill 33 was a first step towards stabilizing rising automobile insurance.
May - June 2003 - MLA Rob Renner conducted a fact-finding tour of insurance systems in other Canadian jurisdictions.
June 2003 – Alberta Finance conducted a public opinion survey on automobile insurance. Findings of the survey included:

73% did not feel insurance rates offered fair value for money.

70% felt young drivers (under 25) were being treated unfairly.

52% believed Albertans paid more for insurance than drivers in other provinces.

79% wanted the government to do more to ensure fair rates.

When asked what the government should do, 22% suggested more regulation, 15% wanted government to lower prices and 11% proposed a public auto insurance system.

When asked if they would support public auto insurance as a solution, 59% said “yes”.

50% believed they would pay the same or more for auto insurance under a publicly run system.

July 2003 - Caucus agreed that government would move toward a reasonable entry-level premium that will provide incentives for safe drivers while motorists with traffic violations and at-fault accidents will pay more.
July 2003 – The Automobile Insurance Implementation Team was formed to develop the mechanics of this proposed policy framework.
July 2003 - Members of the implementation team met with stakeholder groups, including consumer groups, insurance industry representatives and the members of the legal community, and asked for their input on the implementation process.
August 2003 - The government launched a web site www.autoinsurance.gov.ab.ca, to keep Albertans updated on the government’s progress on this issue and to provide more details of the proposed policy framework.
October 2003 – The proposed auto insurance reform framework was presented to Standing Policy Committee on Economic Development and Finance. The government committee sought further clarification on several proposals.
October 2003 – Standing Policy Committee refered discussion on the auto insurance reform framework to full government Caucus.
November 2003 – Government announced a freeze on auto insurance premiums until the proposed framework is implemented.
November 2003 – Standing Policy Committee and Caucus approved proposed changes to auto insurance.
November 2003 – Insurance Amendment Act passed in the legislature.
December 2003 – Rate freeze and Fair Practices Regulation became law.