policyenthusiast
Senior Member
Alberta has implemented no-fault insurance (can't sue for damages after a claim), and a bill has already been proposed at the UCP AGM to repeal it. Found a year-old comment online (pre no-fault) that I found interesting:
Insurance is very poorly understood by the majority of people. A couple of factual points to begin with that are critical to understand to wrap your head around things:
-Insurers aren't as profitable as people think. Despite high premiums, personal auto insurance profitability is near zero, even subsidized in many cases by other insurance products.
-Premiums are based on risk - individual and collective. Insurance is not priced on the prior years payouts but on the anticipated payouts for the future. Insurers also require annual approval from the provincial government for their new base rates.
So why are premiums (or risk) going up? Well, in Alberta we have a few major contributors.
Frequent and severe catastrophic weather events. No other province has seen the scale we have. Ft McMurray fires, Calgary floods, hail storms, etc.
Litigation - too many people here expect a huge payday from minor collisions. Being rear ended doesn't mean you get a free vacation. Insurance goal is to indemnify you, or to put you back into the same place. Canada doesn't have the same type of "mental anguish" stuff like in the US, but too many Albertans think we live in the US and expect the same, and too many lawyers are happy to oblige.
Repair costs - I see so many people driving $100k+ fully loaded pickups. Been here 20 years, the old trucks you used to see are gone. Even the paint on vehicles today is more high tech to be chip resistant etc. Repair costs have inflated substantially with electronics too. This means what used to be $500 in repairs is now $3500+, outpacing inflation. Supply chain as well has caused massive inflation, Alberta auto industry still hasn't recovered from the Coutts border blockade for example. This stuff matters.
Rampant insurance fraud. Around 1/3 of all claims have an element of fraud. This ranges from a legitimate break in and theft, where somebody claims they had $300 Oakley's instead of $20 Walmart sunglasses, to full out fraudulent repair bills where a shop gets paid to use a new part but doesn't replace it at all.
Frequency of accidents. Want cheaper insurance? Stop getting into accidents. People need to slow down and begin paying more attention. Stop texting. I have a 4 way stop by my house that I see people just blow through without slowing down. Lack of enforcement by police and the courts has also contributed to people doing whatever they want.
People need to understand this. Premiums will continue to rise without substantial government intervention to tackle these items.
Also worth throwing it out there - insurance claims is a very tough job. The number of people who are verbally abusive has risen dramatically. If you have a claim, please just be kind - I understand there are bad adjusters out there, but most of them are just doing their best to tackle all the demands people have in an increasingly complex environment.
Insurance is very poorly understood by the majority of people. A couple of factual points to begin with that are critical to understand to wrap your head around things:
-Insurers aren't as profitable as people think. Despite high premiums, personal auto insurance profitability is near zero, even subsidized in many cases by other insurance products.
-Premiums are based on risk - individual and collective. Insurance is not priced on the prior years payouts but on the anticipated payouts for the future. Insurers also require annual approval from the provincial government for their new base rates.
So why are premiums (or risk) going up? Well, in Alberta we have a few major contributors.
Frequent and severe catastrophic weather events. No other province has seen the scale we have. Ft McMurray fires, Calgary floods, hail storms, etc.
Litigation - too many people here expect a huge payday from minor collisions. Being rear ended doesn't mean you get a free vacation. Insurance goal is to indemnify you, or to put you back into the same place. Canada doesn't have the same type of "mental anguish" stuff like in the US, but too many Albertans think we live in the US and expect the same, and too many lawyers are happy to oblige.
Repair costs - I see so many people driving $100k+ fully loaded pickups. Been here 20 years, the old trucks you used to see are gone. Even the paint on vehicles today is more high tech to be chip resistant etc. Repair costs have inflated substantially with electronics too. This means what used to be $500 in repairs is now $3500+, outpacing inflation. Supply chain as well has caused massive inflation, Alberta auto industry still hasn't recovered from the Coutts border blockade for example. This stuff matters.
Rampant insurance fraud. Around 1/3 of all claims have an element of fraud. This ranges from a legitimate break in and theft, where somebody claims they had $300 Oakley's instead of $20 Walmart sunglasses, to full out fraudulent repair bills where a shop gets paid to use a new part but doesn't replace it at all.
Frequency of accidents. Want cheaper insurance? Stop getting into accidents. People need to slow down and begin paying more attention. Stop texting. I have a 4 way stop by my house that I see people just blow through without slowing down. Lack of enforcement by police and the courts has also contributed to people doing whatever they want.
People need to understand this. Premiums will continue to rise without substantial government intervention to tackle these items.
Also worth throwing it out there - insurance claims is a very tough job. The number of people who are verbally abusive has risen dramatically. If you have a claim, please just be kind - I understand there are bad adjusters out there, but most of them are just doing their best to tackle all the demands people have in an increasingly complex environment.