Bill 41, the Insurance (Enhancing Driver Affordability and Care) Amendment Act, was introduced by the Alberta government last week to bring reforms to the auto insurance industry in the province. The proposed changes are being presented to Albertans as a way to contain costs, stabilize premiums and increase medical benefits.
According to Finance Minister Travis Toews, Bill 41 is an interim measure as the Government proceeds with further public engagement specific to the recommendations made by the appointed Automobile Insurance Advisory Committee. The Committee’s report recommends a significant overhaul of the current motor vehicle insurance regime, including adopting a no-fault regime.
Bill 41: Insurance Amendment Act, 2020
If successfully passed, Bill 41 will broaden the definition of a “minor injury” to include not only sprains, strains and whiplash but any clinically associated sequelae of the sprain, strain or whiplash injury, whether physical or psychological in nature, that is caused by the accident. Regardless of the type of injury, in order for it to fall under the definition of a “minor injury”, it must not result in a serious impairment. The question of what constitutes a serious impairment has been addressed by the Alberta Courts.
Bill 41 will also increase specific limits available to those injured in a motor vehicle accident under no-fault accident benefits. This includes increased caps on specific modalities of treatment, increased weekly disability benefit, coverage for medical equipment and access to more health professionals. No changes were proposed to the overarching $50,000 limit on medical benefits under the Regulation.
Bill 41 also proposes to put a cap on the number of damages experts that can be used in litigation. It is proposed that for claims under $100,000 only one expert be permitted and for claims above $100,000 there will be a maximum of three experts.
The new Bill also proposes:
§ A change to the rate and start date for prejudgment interest on non-pecuniary damages. Specifically, interest will only accrue from the earlier of the date the claim is served and the date the insurer is provided notice of the claim. The interest rate will be changed from 4% per year to the applicable prescribed interest rate.
§ A pay-per-kilometer policy option.
§ Direct compensation for property damage in cases involving two insured vehicles.
The Automobile Insurance Advisory Committee’s Recommendations
Alberta currently operates under a tort-based system where individuals can sue the at-fault driver and/or owner for damages for pain and suffering and other losses caused by injuries sustained in a motor vehicle accident. These claims are defended by the at-fault party’s insurer.
No-fault automobile insurance, which currently operates in other provinces including Ontario and is the subject of a constitutional challenge in British Columbia, allows damages to be paid to anyone injured in a motor vehicle accident, regardless of fault. It strips individuals injured through the negligence of a third party to seek damages in civil court.
A 536-page report, publicized last week by the Automobile Insurance Advisory Committee (“Committee”), revealed that the escalating auto insurance premiums in Alberta are the result of injury settlements and litigation costs. The Committee concluded that victims of auto collisions would be better off under a no-fault system where their claims are settled by an independent traffic injury regulator.
Province To Seek Public Input Before Making Final Decision
The lengthy report was released to allow for feedback from the public before a final decision is made, which is anticipated to take place halfway through 2021. Finance Minister Travis Toews has not as of yet decided how to proceed with the Committee’s recommendations to implement no-fault insurance and plans to appoint a panel to lead public consultations based on the Committee’s latest report.
FAIR Alberta, an advocacy group comprised of lawyers, medical professionals and consumers, does not support the recommendations made by the Committee or a move towards no-fault insurance in Alberta. In a statement released on Friday, the organization said:
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. That’s no solution, that’s an even bigger problem.
FAIR argues that individuals should be allowed to seek compensation for their damages, including pain and suffering through the courts, if they choose to do so. A no-fault regime does not take into account each individual’s unique circumstances when providing injury awards. The question also remains how a no-fault regime, which would be compensating both the at-fault and innocent parties involved in a motor vehicle accident, could do so at a lower cost without significantly reducing the individual compensation available.
This article was originally published by The Lawyer’s Daily, part of LexisNexis Canada Inc.
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