Western Standard - Reforming Alberta’s auto insurance system

00:00:00.160 all right well good morning everyone it's great to be here with nate horner our president of

00:00:04.240 treasury board and minister of finance and nathan newdorf our minister of affordability and utilities

00:00:08.720 to talk about how our government intends to continue helping albertans cope with ongoing

00:00:12.720 affordability concerns rising prices are eroding everybody's ability to pay for everything from

00:00:18.960 housing to groceries to heating alberta's government has responded with support including

00:00:24.000 relief payments rebates on utility bills and a fuel tax holiday at the pumps and we're planning

00:00:28.960 even more measures to help make life affordable including tax cuts and seniors discounts because

00:00:34.640 unfortunately the cost of living crisis isn't over just yet we're looking at all possibilities

00:00:39.440 to provide relief and auto insurance is next on our list as anyone with a car knows rates have

00:00:46.000 climbed in recent years they they're another financial burden on top of all of the other

00:00:50.880 burdens weighing albertans down and while auto insurance rates are paused right now we understand

00:00:55.520 that further relief is important once the pause is lifted at the end of the year so we will be

00:00:59.840 taking action to ensure that starting next year drivers with good records will not see

00:01:04.160 their insurance rates increase beyond inflation because people who follow the rules on the road

00:01:10.160 should not be punished when they've done nothing wrong there should also be a reward for doing

00:01:14.960 things right albertans have been asking for relief and we will provide it albertans have

00:01:19.520 also been asking for a flexible payment plan that gives them a bit of breathing room if they need it

00:01:24.480 prices have gone up across the board and it makes it difficult for people to manage their

00:01:28.000 day-to-day finances introducing flexible payment plans for auto insurance will provide more peace

00:01:32.560 of mind for albertans as they still grapple with rising bills and payments this is part of our plan

00:01:37.840 to update the regulations to make more options available another part of our plan is to amend

00:01:42.880 regulations so insurers cannot charge rates that are too high during unforeseen events this was the

00:01:48.480 case during the pandemic when people were driving far less than usual and we will take steps to

00:01:54.000 protect albertans against that kind of thing from happening again and we'll also give the auto

00:01:59.040 insurance rate board the authority to require auto insurers to rebate premiums to their customers

00:02:04.800 based on profit levels this will ensure that insurance companies can still run their business

00:02:08.960 while also ensuring that albertans may be able to recoup some of their fees i want to be clear

00:02:13.680 these are short-term solutions and our government that our government is adopting in response to

00:02:18.400 canada's inflationary economy but we know that albertans have long-term concerns around auto

00:02:24.160 insurance rates that's why we're taking the time to consider longer-term proposals that will be

00:02:28.560 implemented in the next year to keep alberta's auto industry affordable and sustainable but first we

00:02:34.800 need to review an independent report on the state of the industry we've already commissioned this

00:02:39.920 report and are looking forward to receiving it in early 2024 that analysis will give us a better

00:02:45.040 picture of the overall industry and what it needs to do uh or what we need to do in order to best

00:02:50.240 preserve albertans by providing the coverage that they need at a price that they can afford it will

00:02:55.280 not result in us telling insurers how to run their businesses that is not the purpose of government

00:03:00.160 nor is it our intention we know that competition is the best way to guarantee that everyone finds

00:03:05.280 coverage that fits their budget and situation no matter their age or their income we're proud that

00:03:10.560 albertans have the ability to choose their own providers and we don't want to take options away

00:03:14.560 from them we want albertans to have a healthy insurance market with a range of companies

00:03:19.200 offering alberta drivers lots of choice so we'll keep listening to albertans and insurers to ensure

00:03:24.720 that government's decisions reflect everyone's concerns and to ensure the system is fair for

00:03:29.440 both drivers and for insurance providers minister horner has more to add on the details of what we

00:03:35.040 were proposing and before i pass the podium over to him i just want to reassure albertans who are

00:03:39.680 feeling the pain and struggling to get by that extra help is coming minister horner

00:03:48.720 yes good morning and thank you premier we've heard from albertans that they are concerned

00:03:53.440 about the increase in costs of car insurance in the province which is why premier smith task

00:03:58.160 nathan minister newdorf and i to review and develop short and long-term recommendations

00:04:03.440 to make auto insurance more affordable for alberta drivers we're implementing short-term actions now

00:04:08.880 while continuing to develop to develop longer term solutions let me start by recapping the

00:04:13.680 earlier steps we took to provide relief to alberta drivers at the start of this year we put in place

00:04:18.480 a rate pause that will remain in effect until the end of the year this was necessary to protect

00:04:23.120 albertans temporarily from increasing costs while we worked on more sustainable solutions

00:04:28.000 the superintendent of insurance also issued regulatory guidance for insurance companies

00:04:33.440 to offer payment plan options ensuring that most albertans have the flexibility to pay their

00:04:38.080 premiums over time the automobile insurance rate board increased its efforts to create and promote

00:04:43.680 consumer education materials in order to improve public understanding and awareness of insurance

00:04:49.360 the rate board has also taken steps to reduce the maximum allowable profit that insurance companies

00:04:54.560 can include in their rate filing applications now we're taking further steps to make auto

00:04:59.680 insurance rates more stable we intend to introduce changes starting in 2024 for albertans with good

00:05:05.440 driving records these drivers would experience price protection ensuring their auto insurance

00:05:10.480 rates do not increase higher than inflation the price protection would apply to drivers who have

00:05:15.280 not had one or more at fault accidents in the last six years any criminal code traffic conviction

00:05:21.600 in the last four years for example driving under the influence any major traffic convictions in the

00:05:27.840 last three years an example would be speeding in a school zone more than one minor traffic

00:05:34.000 conviction in the last three years for example minor speeding tickets the insurance industry is

00:05:39.360 designed to protect alberta drivers however it is still up to each and every one of us to drive

00:05:43.760 responsibly and keep our roads safe collisions and increased claims directly contribute to higher

00:05:48.960 auto insurance costs affecting all drivers and the insurance industry as a whole we also know

00:05:54.080 that due to reduced driving patterns during the pandemic insurers experienced increased and

00:05:58.880 unexpected profits over the last over the past few years although insurers offered limited rebates

00:06:04.560 to consumers the overall industry experience experience showed profit levels that exceeded

00:06:09.680 the benchmark set by the rate board as a result we intend to amend the automobile insurance

00:06:14.560 premiums regulation so that the rate board can request the filing from insurance companies at

00:06:19.200 any time which would then allow the rate board to lower insurance rates if necessary the rate board

00:06:24.720 would also have the ability to direct insurers to return a portion of premiums to albertans during

00:06:29.760 exceptionally profitable years excess profits are not only detrimental to albertans but also

00:06:35.120 to our province and the reputation of our insurance industry the rate board has been

00:06:39.440 instrumental in delivering evidence-based and efficient rate regulation for auto insurers

00:06:44.560 and continues to play a vital role in ensuring a suitable solution for auto insurance costs

00:06:49.680 finally we will take steps to amend regulations so that insurance companies must offer premium

00:06:54.160 payment plan options to albertans the rate pause was a temporary measure and will lift as scheduled

00:07:00.160 at the end of the year auto insurers will be able to apply for rate increases to ensure that they

00:07:04.960 are capable of covering claims costs however we do intend to place restrictions on how rate increases

00:07:10.400 are distributed among rate payers to ensure fairness along with the short-term reforms

00:07:15.360 announced today we acknowledge that a longer term systemic reform of alberta's auto insurance system

00:07:20.400 is necessary recognizing the complexity of this undertaking we've commissioned an in-depth analysis

00:07:25.680 by an external consultant at this time all options for long-term reforms are under consideration

00:07:31.280 including those suggested by industry participants as well as models seen in other jurisdictions

00:07:37.120 both within canada and abroad we anticipate a draft report by the end of 2023 with the final

00:07:43.280 report expected in the first quarter of 2024 the results of this analysis will inform the

00:07:48.400 recommendations for our long-term reforms we have heard from albertans and we want to assure you

00:07:53.040 that addressing your concerns on auto insurance remains one of our top priorities it was in my

00:07:57.840 mandate and it was included in the throne speech because we're committed to addressing the auto

00:08:02.320 insurance affordability issue i'm proud to be delivering on the first step of this important

00:08:06.880 process to protect albertans and ensure life remains affordable it is important for albertans

00:08:12.000 to adopt and embrace safe drive safe driving habits that will lead to fewer collisions on our roads

00:08:16.880 and lower overall insurance costs for everyone we acknowledge the importance of working with

00:08:21.280 insurance companies and the expertise they offer i want to thank the members of the insurance

00:08:25.840 industry for working with us on these solutions and i look forward to finding lasting solutions

00:08:30.160 for the auto insurance industry for all albertans our government remains fully committed to making

00:08:36.000 auto insurance affordable sustainable and reasonable for both alberta drivers and insurers

00:08:41.040 thank you and i'll now turn it over to minister newdorf

00:08:48.640 good morning everyone and welcome i'm pleased to be here uh pleased to be here to join premier

00:08:53.280 smith and minister horner for this important announcement as albertans are acutely aware

00:08:58.080 our province is no exception to the cost pressures being felt across canada and right around the

00:09:02.960 world the good news is that alberta's economy remains strong and the province's average

00:09:08.160 inflation rate so far this year remains below the national average in addition our low tax

00:09:13.520 environment combined with our government's ongoing red tape reduction and affordability measures

00:09:18.320 have helped stabilize the costs and keep prices comparatively low we know however however that

00:09:23.760 affordability remains a top concern for many albertans as high costs for everyday essentials

00:09:28.960 such as auto insurance make it challenging to make ends meet our government remains committed

00:09:34.080 to keeping albert affordable and with these new steps aimed at addressing high auto insurance

00:09:38.560 rates we continue to build on existing affordability measures to help alberton save money

00:09:43.760 throughout 2022 and 2023 we have taken decisive action to address the rising cost of living in

00:09:49.600 areas where it is needed most the cornerstone of that work was a coordination and implementation

00:09:55.120 of a suite of affordability measures to support individual albertans families and businesses our

00:10:00.640 government however cannot simply rest as a minister of affordability and utilities i will continue to

00:10:06.240 work across ministries to build on our existing affordability measures with a specific focus on

00:10:11.760 insurance housing electricity and food costs to save albertans money and keep this province

00:10:16.960 affordable now and for years to come the reforms we have announced today will help make a tangible

00:10:23.120 impact for alberta motorists and help restore balance in our insurance regime to underpin

00:10:28.000 long-term affordability it is through changes like these that we will ensure that alberta remains the

00:10:33.120 best and most affordable place to raise a family run a business get a job drive a car and buy a

00:10:38.800 house and with that i'd like to thank premier smith and minister horner on their advocacy

00:10:43.120 advocacy on this and many other affordability issues and i'm excited to continue working with

00:10:48.400 them and on this file going forward and with that i'll hand it over to sam for questions from

00:10:53.920 record perfect and we'll go into the media q a now as usual one question one follow-up we'll start

00:10:58.720 off here in the room if i could get you to raise your hands for a question and we'll start off with

00:11:02.880 you katherine okay sure so um i'm looking back and answered in june of 2020 um and the government

00:11:10.400 was saying that the rate cap was a bad day it failed to address systemic homes the ndp was just

00:11:16.160 kicking can down the road um and the rate cap actually led to fewer options um and

00:11:25.600 at that time you were trying to work on long-term sustainable solutions so

00:11:29.680 so what changed that now a rate cap is a good idea i think it's important to understand that

00:11:36.080 this needs to be short term this this isn't this is not sustainable either and the insurance the

00:11:42.080 The insurance industry will tell you that they there's built up pressure from the pause that was put on over the last year. So this is a short term, short term solution to ensure that especially Alberta's good drivers see great protection, but we need to get to the long term reforms.

00:11:59.000 Nothing in this package really gets at the cost associated to auto insurance.

00:12:06.600 It does move some of the things around.

00:12:08.400 It gives the rate board more teeth to apply when dealing with the insurance companies

00:12:14.280 on rate filings.

00:12:15.540 But the actual costs in the system, when you compare us to other jurisdictions, this is

00:12:21.940 not getting there.

00:12:22.940 We'll need to see that in the study.

00:12:24.960 So hopefully that's in the report back end of 23 or first quarter 24, the final report.

00:12:31.200 And as I mentioned, in 2020, you were doing an independent committee to review this.

00:12:39.100 So who is the consultant who has been hired?

00:12:41.540 How much does it cost?

00:12:42.540 And why do you need another review?

00:12:45.140 It's the Oliver Wyman group of actuaries.

00:12:48.740 They were chosen because they're the actuarial firm that the rate board uses.

00:12:53.840 So, they have a lot of background and knowledge in the, in the system and specific to Alberta system. I believe the budget cost is 500,000 dollars.

00:13:03.440 Yeah, regarding regarding the CBP, in a letter this morning, Mr. Freeland said that while Alberta has a right to withdraw, Albertans deserve to know that it would be a historic, costly and irreversible with certain sort of that.

00:13:23.780 I look forward to them, you know, showing us their work, they've done nothing yet, but, you know, high level responses to with nothing behind them. So we want, we'd like to get their number. We've asked them formally for what the number would look like. I think all provinces would want to understand that, but show the work behind it.

00:13:44.780 And regarding insurance, what's the percentage of drivers with a good record?

00:13:50.780 We don't know that precisely, but we're confident it's definitely the majority

00:13:56.780 of Albertans, but we'll know that better as the rate filings unfold.

00:14:02.220 I'm hesitant to say, just because I don't have a precise number.

00:14:08.020 And we'll go to you, Janet.

00:14:10.020 Yes, so the Alberta Civil Trial Lawyers Association apparently sent you some recommendations

00:14:18.180 at the beginning of this year saying that not only are they concerned about the profits that

00:14:26.340 insurance companies are drawing in, but they recommended that you put into law that the

00:14:31.460 insurance profits can't exceed 7% of premiums, not just regulation or MO. And they also recommended

00:14:38.980 that you create a consumer watchdog to oversee the industry. So why aren't either of those

00:14:44.900 included here today well their proposals along with industries were put forward within the

00:14:51.700 commission study but i'd say you know everything comes at the expense of something else you know

00:14:59.460 the one thing that the many of the other jurisdictions around us that have lower

00:15:04.420 automobile insurance have is they are not on the tort system like alberta is but i don't want to

00:15:10.100 pit the injury lawyers against the auto insurance people right now um we'll let we'll i don't want

00:15:16.340 to presuppose what's out there we'll get the report back and like i said everything's on the

00:15:20.420 table i mean in comments even as recently as a couple days ago you've been you have been very

00:15:27.060 cautious about this idea of a no-fault insurance system but now we're hearing in the tech briefing

00:15:31.380 today anything is on the table ensure including a potential public insurance offering in alberta

00:15:37.780 so have you changed your tune and if so what made you change your tune well i i don't know

00:15:42.820 how many months i've been in this job now premier but um a lot of meetings with um all of all of

00:15:48.340 the players within the system um and just the simple fact that what we've what we've done today

00:15:53.700 hasn't taken costs out of the system that's why we we know that if the goal is to um if the goal

00:16:00.580 is to to make alberta auto insurance more affordable comparative uh to the other provinces

00:16:05.540 in the country more will need to be done and i think it would be unfair to be ideological and

00:16:11.940 take anything off the table so i want to wait and see see back what the report says and the premier's

00:16:18.340 the premier's given me that in my mandate that we need to look at everything and do we have any

00:16:23.140 other questions yeah i could explain the definition of a good driver is a bit narrow also my

00:16:28.420 understanding is the recap company any or sorry this new recap would not apply to any new drivers

00:16:32.820 and even switching companies moving we're buying a new vehicle what do you say to the criticism

00:16:37.300 that this scope is too narrow and it should be a wider netcast so that moral burns can benefit

00:16:41.540 well i'd say that criticism is always going to be there it's hard to create a definition we worked

00:16:46.180 with uh we worked with the rate board uh to come up with this definition of a of a good driver

00:16:53.060 it gives room for every person to become a good driver the grid is still there to provide

00:16:57.940 protection for those that fall outside of these parameters but what the insurance companies will

00:17:02.740 also tell you is that there's a lot of pressure built up uh right now in the system from the

00:17:07.460 year-long pause so we need to give them places to increase rate in the system or we will start

00:17:15.220 to see companies leave as well so that's why this is needs to be short term

00:17:21.460 question is unrelated it's for the premier um i'm wondering why do you think spending

00:17:26.020 eight million dollars on the telefez campaign is more important or a better place than just

00:17:30.260 putting that money into really for Albertans and their energy bills well because we're trying to

00:17:34.660 make sure that every MP across the entire country understands that they're acting in a way that will

00:17:40.420 create unreliability in our grid create unaffordability in our grid and is unconstitutional

00:17:46.020 so MPs make a decision on this MPs have the ability to advocate for something that is more

00:17:52.420 reasonable and we want to make sure that every MP understands our position thank you and we're going

00:17:58.020 We're going to go over to the phones now. Operator, could you put through our first caller, please?

00:18:02.020 Hello, thank you for taking my question. So, my first question is, you're about to implement long-term solutions.

00:18:14.020 What is the stable of long-term solutions to be?

00:18:18.020 Oh, gosh. Like we said, we're looking at the entire gamut, you know, jurisdictions within the province, obviously,

00:18:27.020 but also places that have an interesting record for really writing their auto insurance situation.

00:18:36.400 New Jersey comes to mind as a state that's highlighted in the system that had a terrible track record that's really turned things around.

00:18:43.780 New South Wales has an interesting system right now where they're offering no fault or limited litigation system,

00:18:54.900 system, but it's being delivered by private companies as opposed to, you know, a government

00:19:00.360 crown corp. So that's really the extent of the whole gamut. You're either full tort or

00:19:06.760 you're at some point limited litigation or hybrid.

00:19:10.720 Okay. And my second question is, what makes a little bit different from many of the

00:19:18.020 provinces when it comes to auto insurance is there's no public provider, like in Richland

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00:19:47.860 instances it provides uh it provides a great tool for their citizens i know many people that are

00:19:53.940 very happy with saskatchewan system uh and the way it's delivered so i think it it warrants a really

00:19:59.620 deep dive and uh if that's what the report says with the blessing of the premier and cabinet

00:20:05.140 that will be the direction we'll take but uh too early to presuppose great thanks uh jonathan

00:20:10.660 operator could you put through our next caller please

00:20:12.500 I'm hearing an echo here, but hopefully you can hear me.

00:20:21.500 Talking about getting the cost down, it is true that providers such as Saskatchewan

00:20:29.500 and Manitoba generally have lower premiums, but I'm looking at the Manitoba site and it

00:20:36.500 says there are no lawsuits or cash settlements for payments operating in Manitoba.

00:20:41.060 they provide benefits but no lawsuits or cash settlements how how when you talk about sort of

00:20:49.300 the legal aspects and trying to get the cost down can you at least point us a little bit more you

00:20:54.740 mentioned the word torrent mentioned the word no fault perhaps some minister honor can sort of

00:20:59.700 explain what what it is about legal costs that could help you in your quest to get a lower cost

00:21:08.420 system sure thank you rick well i'd say that um you know something that's evident you know bodily

00:21:15.220 injury claims are a a larger percentage of of the overall insurance costs um within the bodily injury

00:21:23.620 claims uh legal fees are a substantial substantial substantive portion of that uh maybe 40 so that's

00:21:31.460 that's something that some jurisdictions have uh attempted to avoid let's say by a

00:21:36.820 increased schedule, either of payments or benefits. So that's something that will definitely be on

00:21:42.820 the table and that the report will look into. The supplementary question is, seeing

00:21:53.380 everything is on the table, even as perhaps a government system, are you willing to put on the

00:22:00.740 table the three percent tax on auto insurance premiums which i believe is still a great since

00:22:09.700 you're also the finance minister and may have the report by the time of the budget so are you willing

00:22:15.300 to at least think about that as well well i guess you've got me thinking rick but i think it's way

00:22:22.020 too early way too early to to see that i need we need to see the report first and have a full

00:22:26.820 conversation with cabinet perfect thanks for that rick and doesn't look like we have any more

00:22:31.940 questions for today oh yeah morgan so instead is there a scenario where your tax your insurance

00:22:39.940 getting lower anyway because your car is getting older how like is there a scenario where you

00:22:44.020 would be paying more because now there's this cap um so that that'll be part of your individual

00:22:52.740 drivers abstract filing with your company so if you're driving an older depreciated vehicle that

00:22:58.500 they should be offering you a lower rate or at least comparative to the other increasing pressures

00:23:04.660 in auto insurance so that that should be happening anyways the the cap shouldn't

00:23:10.180 affect that specifically with your driver's file i guess yeah yeah

00:23:17.380 and then that's all of our questions thank you everybody for joining us

00:23:20.100 Thank you all.

Western Standard - November 02, 2023

Reforming Alberta’s auto insurance system

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