AB - Auto Reform

Question 1

Identify the goals of Alberta auto insurance reform (7).

Answer 1

• private sector delivery model
• claims handling: effective and efficient
• medical benefits: make sure they are appropriate
• income replacement: easier access
• reduce costs
• stabilize rates: should be affordable for all Albertans
• sustainability: the needs of insureds, “traffic-injured” persons, and insurance providers need to be met

Question 2

Briefly describe the findings of the Alberta auto insurance committee. (5)

Answer 2

• high premium were caused by increasing BI (bodily injury) costs (specifically non-pecuniary awards for pain and suffering due to the tort system)
• no mechanisms existed to control these BI costs
• injury compensation was often either too high or too low
• health outcomes are worse under tort system (and hybrid tort/no-fault systems)
• health outcomes improved when tort systems were eliminated and replaced with full no-fault models

Question 3

Name 2 provinces that have pure no-fault systems.

Answer 3

Manitoba and Quebec.

Question 4

Identify the recommendations of the Alberta auto insurance committee. (2)

Answer 4

• replace existing hybrid tort/no-fault model with a pure no-fault model
• introduce a “continuum of care model” to promote appropriate medical evaluation, assessment and treatment

Question 5

Why might a pure no-fault system be cheaper and deliver more effective medical treatment.

Answer 5

Benefits can be delivered without having to prove who is at fault:

• less money tied up in legal system (lawyer fees)
• quicker access to medical care

Question 6

Describe how Alberta’s new auto insurance is recommended to work.

Answer 6

Create a Traffic Injury Regulator, including a Board and Tribunal to oversee the 4 arms of accident care and compensation:

1) claims administration and support
2) medical experts to evaluate injuries
3) claims assessment panels for income replacement
4) a reconstituted version of AIRB (Automobile Insurance Rate Board)

Question 7

How might the ‘4 arms’ of Alberta’s Traffic Injury Regulator be funded?

Answer 7

• mainly by Alberta auto insurers in proportion to their market share
• a smaller contribution by the Alberta government (from savings generated by the new system)

Question 8

Assess the likelihood of a successful legal challenge if Alberta’s auto reforms are implemented.

Answer 8

A legal challenge would probably not be successful for the following reasons:

• Manitoba and Quebec already have a pure no-fault system
• such systems have been judged to be within the scope of provincial legislative authority
• a challenge under Canada’s Charter of Rights and Freedoms has no merit because all drivers are treated equally
• Morrow v Zhang upheld the minor injury cap, so a future Charter challenge would likely not succeed either

Question 9

Identify regulatory reforms being considered for Alberta auto insurance. (2)

Answer 9

• switch from ‘prior approval’ to ‘file and use’

- make winter tires mandatory from October to March

Question 10

Identify problems that Alberta and Ontario auto insurance have in common. (2)

Answer 10

• rising costs of auto insurance (largely driven by BI (bodily injury) costs)
• inefficient delivery of medical care

Question 11

What has been identified as the primary cause of the problems in AB and ON auto insurance?

Answer 11

Both systems have a tort component which causes:

• delays in medical care
• diversion of resources to the legal system

Question 12

Identify a similarity in recommendations to address these problems in AB and ON auto insurance.

Answer 12

Provide a greater focus on timely medical care.

Question 13

Identify a difference in recommendations to address these problems in AB and ON auto insurance.

Answer 13

• AB: convert to a pure no-fault system
• ON: keep hybrid tort/no-fault system, but fix structural flaws by appointing an arms-length regulator with powers to enact policies and procedures)