No-Fault means No Savings
Lower coverage, Higher Prices?
Debate rages on about whether the Alberta government should change our auto insurance to a no-fault system.
A no-fault system is pushed hard by insurance companies because it would grant them unprecedented control over how insurance operates in Alberta. Under this system, there would be no more recourse for consumers to challenge insurers in court – whatever the insurance company decides about someone’s injury resulting from a car accident would be final. This would save insurers money as they could low-ball consumers with impunity. The most significant promise from insurers is that they would use these newfound savings to lower premiums for consumers.
What does no-fault mean?
Experience in the US and other provinces shows that no-fault insurance doesn’t reduce premiums; it leads to higher costs, fewer protections for consumers, and no accountability for bad drivers or insurance companies.
No-fault insurance is standard with government-run insurance programs (think BC or Saskatchewan). In government-run systems, no-fault insurance can lead to lower premiums. This is because the government can pass on any savings directly to consumers, as it’s not looking to make a profit.
But in private insurance markets, savings are taken as new profit for insurers. This is why Ontarians who have private, no-fault insurance pay more for auto insurance than anyone in Canada.
It’s improbable that the move to a no-fault system lowers our premiums. In 2003, Colorado switched back to an at-fault system after years of no-fault. After 4 years under the at-fault system, premiums had dropped by 32%.
Another horror story? In Michigan last July, some people even saw their rates automatically increase when their premiums got renewed right after the move to a revamped no-fault system.
Broadening benefits to everyone in an accident without regard for fault greatly increases the pool of those receiving benefits and produces more claims. Yet, in the face of more claims (no matter if actual or perceived), insurance companies raise premiums and offer less coverage in order to protect their bottom line.
The primary reason why premiums get so high is moral hazard and the perverse incentives offered by no-fault. Research describes a “lottery mentality” associated with no-fault thresholds and a claiming culture arising from providing benefits to both at-fault and innocent drivers.
The takeaway? No-fault won’t save Albertans money. It’s only here to increase the insurance companies’ bottom line.
What you can do
Contact your local representative
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Injured Albertans Speak Out
Please understand that insurance must continue to support those who are truly injured. We need your voice to support us. Please speak up on this issue.
I knew when I woke up and the feeling of fogginess, inability to focus, feeling unable to connect with what as going on around me, that I had another concussion. My first concussion had been four years earlier and I hadn’t fully recovered, but I was better in so many ways. I was finally starting to regain some of the abilities that I had lost, and now…
Life now, is hard. I spent years working on my career finding direction and discovering how to best apply my interests and talents. I finally discovered that I excelled at project management. I was organized and communicated well. I had a background in design and manufacturing controlled budgets of $56M, and now I can’t organize how to make simple phone calls to plan my medical appointments. I have lost abilities in concentration and three-dimensional thinking. I feel I no longer possess the skills that made me such a great project manager, and now I’m struggling to figure what I can I do.
I haven’t been back to work since my accident. I have been home with my children trying to get well enough to go back to work, or school, or something, but I can’t seem to keep up with the bad days. I can only remember one good day in the past four years. I’m so tired of trying to seem mostly ‘normal’ that simple frustrations set me off and I can’t claw back control my emotions. I feel like I’m missing out on my life, my children’s lives. I feel I have everything I could possibly ask for, but I lack the ability to enjoy it. Suffering multiple brain injuries has me left with a fatigue I can never get enough sleep for, an anxiety I can’t escape from, and an apathy to my own life. A concussion can be life-impacting. My life was impacted.
As a former insurance adjuster and with over a decade of experience working on motor vehicle accident bodily injury claims, I have long been well aware that thousands of Albertans each year are injured by careless motorists. With prompt and appropriate treatment, many recover within about 12 weeks in which case, quite frankly, compensation for pain and suffering in the $5,000.00 to $5,500.00 range is reasonable.
However, I am also well aware (now painfully so) that many other wrongfully injured Albertans suffer traumatic injuries in auto accidents that evolve into chronic pain conditions. I am one of those Albertans. Whether I eventually recover from these injuries or end up with permanent clinical impairment remains to be seen, but either way it’s common sense (and common law) that I deserve to be compensated for my pain by the negligent driver’s insurer at a figure well in excess of the minor injury cap, which was always intended only to apply to people suffering minor strains and sprains that healed relatively quickly, ie., within 90 days or so.
The whole point of insurance is that a community of millions (myself included) chips in some money in the form of premiums so that there is a pool of funds available to compensate the thousands of ordinary Albertans (me too, unfortunately) who are injured each year by negligent motorists. Apparently, insurance companies would rather continue to rake in premiums from consumers like me, but pocket that cash rather than having to fully compensate innocent injured Albertans for our pain and suffering — but that wouldn’t be fair, now would it?
About FAIR Alberta Injury Regulations
FAIR Alberta is a coalition of concerned consumers, medical professionals, injured Albertans, and members of the legal community who are committed to protecting the rights of individuals that have been injured in motor vehicle accidents.