Today, Insurance Bureau of Canada (IBC) launched a campaign to inform the public of the impact that runaway legal costs and litigation fees are having on the auto insurance premiums that Alberta drivers pay.
Across the province, the LowerLegalFees campaign will reach Albertans through advertisements on billboards, newspapers, radio, the web and social media. A dedicated website will also provide additional facts about how legal costs are driving up their premiums.
“Alberta drivers deserve an auto insurance system that is affordable, sustainable and that ensures they get the care they need after an accident,” said Aaron Sutherland, Vice-President, Pacific and Western, IBC. “That’s why we need to have an honest conversation about what’s driving the cost of premiums in this province. The majority of Albertans injured in a collision make a claim and receive the benefits they need to recover. However, some personal injury lawyers are using aggressive marketing and advertising to encourage frivolous claims, which drive up costs for everyone. As a result, the legal costs involved in claims settlements are now more than double the cash payment provided for pain and suffering for those injured in collisions. Change is needed, now.”
A recent report by consulting firm MNP LLP found:
Lawsuits and legal fees associated with insurance claims have soared 31% in Alberta since 2018 and now account for about 20% of a driver’s premiums for mandatory coverage.
Between 2018 and 2022, over $1.2 billion of the premiums drivers paid went to legal costs associated with claims.
Legal settlements following a collision are now three times higher in Alberta than anywhere else in Canada.
Approximately 38% of settlements paid to people injured in a collision go toward the legal costs resulting from litigation. That’s more than twice the share that goes to the claimant to account for pain and suffering.
“On April 26, the Alberta government launched a public consultation intended to help inform action to make auto insurance more affordable. In doing so, the province released two reports that provide further evidence of the enormous financial impact that litigation costs and legal system abuse are having on auto insurance premiums,” said Sutherland. “This new analysis found drivers can save hundreds of dollars annually if legal costs are brought under control. There is no longer any debate: to deliver savings to drivers, Alberta must move urgently to address the legal costs underlying premiums.”
Alberta’s auto insurers have put forth a proposal that would improve today’s system by allowing drivers to choose new coverage options, giving them more control over their coverage and helping them save money, while doubling benefits to those injured in a collision. Combined with regulatory and tax improvements, this proposal could save drivers an average of $325 annually on their auto insurance.
