BREAKING NEWS! QB Strikes Down Cap On Minor Injuries!

[troutman]

There are really two main arguments ACTLA is going to make at the AIRB Hearings. One is against the insurer’s windfall profits; the other is against the government’s hidden tax on insurance premiums. That’s right. The government rakes in more cash when insurance premiums go higher. [info from my partner who specializes in this area]

Letter to the Editor, Edmonton Journal:

Auto insurance review


The Edmonton Journal


Saturday, June 07, 2008


Alberta's Automobile Insurance Rate Board is holding its annual public hearing this month to consider adjusting auto insurance rates.

Last year's hearing, as usual, primarily consisted of insurance companies lobbying for a hike. Only one entity in our sleepy one-party state bothered to argue that a premium increase wasn't necessary -- that's right, yours truly. And to its credit, the AIRB held the line on rates.

This year, I fear a possible replay of the scheme perpetrated on Albertans a few years ago: that, despite a sharp decline in injury claim frequency rates, insurers will try to jack up premiums by about 25 per cent, and Alberta Finance will then "decrease the rate of increase" by regulating reductions in victims' pain and suffering compensation.

Maybe the Tories will trade their illegal cap for a deductible (paid by victims) and call it "change that works."
The result: higher premiums and lower victim compensation for Alberta motorists, and insurance companies continuing to laugh all the way to the bank.

If the Stelmach government really gives a tinker's damn about vulnerable Albertans, it can reduce rates for good drivers without gutting victim compensation, by trimming the outrageous windfall profits reaped by insurance companies over the past few years.

Scrapping the hidden insurance premium tax would also provide significant rate relief for Alberta motorists.
I'll put those submissions, and others, to the AIRB later this month.

Mark McCourt,
Edmonton

[fredr123]

http://www.airb.gov.ab.ca/public_mee...008/index.html

Transcripts, written submissions and presentations from the AIRB proceedings from a couple weeks ago. Hat tip to troutman for passing along the link.

[Cowboy89]

Maybe Troutman or Fredr123 can answer this one as to help me guage the angle of the ACTLA. If insurance companies were raking in larger than normal profits, would there be less of an incentive for them to challange individual claims of minor injuries or to low ball settlements and thus lower demand for lawyers?

I know that if I was in a situation where I was a victim and felt what the insurance company was offering was fair or more than fair, to avoid paying lawyer fees I would simply accept it and move on. However if I felt my injuries were worth a $20,000 settlement and they were only offering me $10,000 to try to either cut costs or to delay the onset of paying a $20,000 settlement to keep their duration ratios on their investment portfolios in line or because they were feeling more of a competitive squeeze to keep costs down, I would probably seek help from a lawyer to get me the settlement I feel I deserve.

[troutman]

Originally Posted by Cowboy89

Maybe Troutman or Fredr123 can answer this one as to help me guage the angle of the ACTLA. If insurance companies were raking in larger than normal profits, would there be less of an incentive for them to challange individual claims of minor injuries or to low ball settlements and thus lower demand for lawyers?

I know that if I was in a situation where I was a victim and felt what the insurance company was offering was fair or more than fair, to avoid paying lawyer fees I would simply accept it and move on. However if I felt my injuries were worth a $20,000 settlement and they were only offering me $10,000 to try to either cut costs or to delay the onset of paying a $20,000 settlement to keep their duration ratios on their investment portfolios in line or because they were feeling more of a competitive squeeze to keep costs down, I would probably seek help from a lawyer to get me the settlement I feel I deserve.

Sorry, I can't understand you first question.

As for the second part, how would you know if a settlement offer was fair without legal advice? Are you going to trust the adjusters? I think most (if not all) injury lawyers offer free consultations to assess your case. Then, you can make an informed decision about whether it is worth it or not to retain a lawyer.

[Cowboy89]

I guess what I was getting at was; Is there more business for lawyers if insurance companies are making less money?

[Titan]

Originally Posted by Cowboy89

I guess what I was getting at was; Is there more business for lawyers if insurance companies are making less money?

I don't think the two things are related. What drives the lawyer's business is the number of accidents people are getting into.

What drives the ins. co. profits are the market returns on their investments, the number of premiums they collect and the amount of the premiums and the cost of paying out on the policies they carry. If for whatever reason the ins. co. profits go down the only way it would affect lawyers is if the ins. co. tightened the screws and refused to pay any claims at anywhere near the value. This would create a higher demand for lawyers.

Also, the ins. co. makes an offer knowing there is a value, to both parties, to getting the claim completed, avoiding lawyers and court. So what might be a "fair" settlement before lawyers are involved may increase exponentially after. In other words the early settlement is less reflecting a premium for getting it over with. In my opinion if the ins. co. were to make their initial offers a little more generous they would improve their settlement rates to the benefits of everyon.

[fredr123]

http://network.nationalpost.com/np/b...itutional.aspx

Nova Scotia's damage cap was ruled constitutional at first instance in the Nova Scotia Supreme Court. You'll recall Alberta's Court of Queen's Bench found the opposite result here. That matter is yet to be heard before the Court of Appeal.

[troutman]

Originally Posted by fredr123

http://network.nationalpost.com/np/b...itutional.aspx

Nova Scotia's damage cap was ruled constitutional at first instance in the Nova Scotia Supreme Court. You'll recall Alberta's Court of Queen's Bench found the opposite result here. That matter is yet to be heard before the Court of Appeal.

We should hear from the Alta C.A. soon. Seems clearly unconstitutional to us.

NS case - headnote:

HELD: Applications dismissed. There was no basis to find a pre-existing stereotype or disadvantage related to motor vehicle accident claimants who suffered minor injuries. The statutory cap applied to all minor injuries and was not restricted solely to soft tissue injuries. The legislative scheme did not deny those accident victims who suffered minor injuries the right to pursue their pecuniary losses. Additionally, the fact that the legislative scheme did not cap the amount of non-pecuniary damages claimed by more seriously injured claimants militated against finding that those less seriously injured were stereotyped or discriminated. The impugned provision did not create a distinction based on gender, as both men and women who suffered minor injuries received non-pecuniary damages up to the cap of $2,500. The Limitation Regulations were not ultra vires the Insurance Act, as they were consistent with the legislation and the power to define expressions therein. McKinnon led no evidence to rebut expert medical testimony that post traumatic stress disorder was a physical injury in nature. No distinction was made with respect to her injury on the basis of a medical disability and accordingly her application was dismissed.

This part sticks out for me:

The legislative scheme did not deny those accident victims who suffered minor injuries the right to pursue their pecuniary losses.

[ok, ok,....I get it]

I guess I wonder about the strenght of the releases signed by people that did not retain a lawyer. Say for example, someone had a 8 month injury, but only recieved $4000, or less, and that injury would be worth more in a "non-cap" enviroment, could they challenge the release?

[troutman]

Originally Posted by ok, ok,....I get it

I guess I wonder about the strenght of the releases signed by people that did not retain a lawyer. Say for example, someone had a 8 month injury, but only recieved $4000, or less, and that injury would be worth more in a "non-cap" enviroment, could they challenge the release?

I think they would have a good argument if they never had independent legal advice.

[ok, ok,....I get it]

Originally Posted by troutman

I think they would have a good argument if they never had independent legal advice.

can you say pandora's box?

[nickerjones]

Originally Posted by burn_this_city

I agree with alot of what your saying.. But some of these cases are pretty cut and dry and insurance is more than willing to settle prior to it going to court.. Its pretty tough to tell how much time they actually put in the case, we don't exactly see timesheets.. But I don't feel making a half dozen phone calls and faxing a letter the insurance companies warrants a $5000 payout on $15,000.. My friend was in a pretty severe accident where he almost died, he was lucky not to have any long term injuries. His lawyer took over $30,000 off his settlement at the end.. He kept phoning my buddy and telling him to go for more and more and more.. Eventually the insurance company told him this is all your getting or we'll see you in court.. I think some sort of oversight is required if its going back to a free for all like before.. Otherwise it will be the average driver paying for all of this..

when i got in my wreck , in which my first wife passed, before i sought legal help i was already told by my insurance i was getting the 50k uninsured motorist settlement. I sought legal representation because i wanted to avoid filing bankruptcy on the 200k+ medical bills my wife has incurred when they tried to save her life. He told me he would take 40% and i wouldnt have to file bankruptcy and we would sue so this lady had to pay for the med bills etc... Well he did nothing and collected his 40 % off the money i was getting before i talked to him and i still had to file bankruptcy. his words were "cant get blood from a stone, just file and in 10 yrs itll be gone"

Some lawyers disgust me , not you troutman, but some

[fredr123]

From Rick Bell (so take the tone with a grain of salt) today: http://www.calgarysun.com/news/colum...09556-sun.html

It's auto insurance rate-setting time again.



And this time, as the sums are still being finalized, the lovely folks who send you the bill for premiums are expected to push for an increase in insurance premiums in the ballpark of 30%, effective Nov. 1.

[ken0042]

Originally Posted by fredr123

From Rick Bell (so take the tone with a grain of salt)

I'm impressed- it took until 3/4 of the way down until I read one of his stupid nicknames for somebody.

I think I said it before- but I'm fine with this. I pay to be insured; not insured against certain kinds of injuries resulting from car crashes. Tell me what I owe, and send me the bill.

And of course he compares our rate increases with Saskatchewan and Manitoba. Never mind he isn't comparing the actual rates; but the increases. I sure hope when it comes time to compare rates; he either does so with any cities in either province of over 1 million people, or compares rates in cities of comperable sizes; like Brandon to Medicine Hat.

[Slava]

Originally Posted by ken0042

I'm impressed- it took until 3/4 of the way down until I read one of his stupid nicknames for somebody.

I think I said it before- but I'm fine with this. I pay to be insured; not insured against certain kinds of injuries resulting from car crashes. Tell me what I owe, and send me the bill.

And of course he compares our rate increases with Saskatchewan and Manitoba. Never mind he isn't comparing the actual rates; but the increases. I sure hope when it comes time to compare rates; he either does so with any cities in either province of over 1 million people, or compares rates in cities of comperable sizes; like Brandon to Medicine Hat.

The reason that I'm against this is because when their investments do poorly the insurers come back to the well to get more money from the policy-holders...which is basically what is going on here.

Its dressed up to look like the cap removal is the cause, but if the premiums didn't drop by 30% when the cap was put in why are they rising by this amount today? Same thing happened in 2002/2003 when the insurers got hammered on their investments.

[ken0042]

I guess my recollection was that the cap was put in place instead of a large rate increase. To which my response was to continue to cover me, and send me the bill.

[Slava]

Originally Posted by ken0042

I guess my recollection was that the cap was put in place instead of a large rate increase. To which my response was to continue to cover me, and send me the bill.

You're right; the cap was put in place to stop the large rate increase. But the reason for the large rate increase is what is faulty in my opinion. Its easy for the insurers to claim that this is because of the injury claims and rising claims costs, but the insurance markets cycle just like the rest of the business cycle. In my opinion (and having seen the inner workings very closely of a P&C insurer on a number of fronts) I come to the conclusion that the consumer is getting screwed here.

[Finny61]

Originally Posted by ken0042

I'm impressed- it took until 3/4 of the way down until I read one of his stupid nicknames for somebody.

I think I said it before- but I'm fine with this. I pay to be insured; not insured against certain kinds of injuries resulting from car crashes. Tell me what I owe, and send me the bill.

And of course he compares our rate increases with Saskatchewan and Manitoba. Never mind he isn't comparing the actual rates; but the increases. I sure hope when it comes time to compare rates; he either does so with any cities in either province of over 1 million people, or compares rates in cities of comperable sizes; like Brandon to Medicine Hat.

Speaking outside of the cap issue for a moment, it bothers me when people assume that all provinces are the same all people should be treated equally because that's the feel of the statement. Auto insurance rating is based on a couple of principle foundations, one is VRG which is the rating on your vehicle based on statistics of repairability, collision intensity (other minor things such as engine size etc), and one of the other big factors is territory. Prior industry claims data determines territory rates and each insurance company decides how to break up their territories (some will split cities into quadrants, some would rate a city as whole) it depends on how precise they want to be or can afford to be because of upkeep. For example in Ontario, typically you will find insurers have territories broken to about 50 or 60 and its based on postal codes. It's funny because I know of a town of 10,000 people and they pay practically the same as most Toronto suburbs, why would that be? It's because the people that reside in that area have claims losses equivalent to those from the big city but drive 10km to the next town and you cross a rating territory border where claims data shows lower losses and you pay approximately 40% less (yes very big bucks, worth moving isn't it?). Premium must be commensurate with the potential risk and claims data helps predict the loss amounts so they can determine the base rating in their actuarial office (stats dorks).

I'm no claims expert so I can't jump into the discussion about the cap because I simply am not educated enough on it but when it comes to rates I am more helpful. It seems though that the removal of a cap applies a certain unpredictability over how that could affect the insurance companies, and in panic they are trying to assess the likelihood of claims size thanks to our imperfect law system and overestimating percentages.

[Slava]

Originally Posted by Finny61

Speaking outside of the cap issue for a moment, it bothers me when people assume that all provinces are the same all people should be treated equally because that's the feel of the statement. Auto insurance rating is based on a couple of principle foundations, one is VRG which is the rating on your vehicle based on statistics of repairability, collision intensity (other minor things such as engine size etc), and one of the other big factors is territory. Prior industry claims data determines territory rates and each insurance company decides how to break up their territories (some will split cities into quadrants, some would rate a city as whole) it depends on how precise they want to be or can afford to be because of upkeep. For example in Ontario, typically you will find insurers have territories broken to about 50 or 60 and its based on postal codes. It's funny because I know of a town of 10,000 people and they pay practically the same as most Toronto suburbs, why would that be? It's because the people that reside in that area have claims losses equivalent to those from the big city but drive 10km to the next town and you cross a rating territory border where claims data shows lower losses and you pay approximately 40% less (yes very big bucks, worth moving isn't it?).

I'm no claims expert so I can't jump into the discussion about the cap because I simply am not educated enough on it but when it comes to rates I am more helpful.

In Alberta there was one insurer in particular that was using postal codes to screen out a native reserve a few years ago.

[Cowboy89]

Originally Posted by Slava

In Alberta there was one insurer in particular that was using postal codes to screen out a native reserve a few years ago.

And therein lies one of the biggest problems with insurance and public policy. Statistically speaking you can probably discriminate on a number of different grounds to optimize pricing mechanisms that seem morally reprehensible to the public. IE (Race, religion, sexual orientation). The problem being that once an insurer has to avoid discriminating based on these things then the real cost of risk of a particular individual becomes cloudier. Therefore ultimately those who are truly less risky end up subsidizing riskier groups. We've already seen instances of this in BC and Sask in the past where efforts to make insurance cheaper for young male drivers has raised the costs for other less risky groups.