The rising cost of auto insurance premiums in Alberta has been a hot topic in the insurance industry, with many pointing to the increasing number of lawsuits as a major contributing factor.
According to a recent report by the Insurance Bureau of Canada (IBC), Alberta has seen a significant increase in the number of lawsuits related to auto accidents in recent years. In 2019 alone, there were over 50,000 auto injury claims in the province, with an average cost of $30,000 per claim. This is a stark contrast to the national average of $12,000 per claim.
Industry experts believe that this surge in litigation is driving up the cost of auto insurance premiums in Alberta. With more lawsuits being filed, insurance companies are forced to pay out larger settlements, resulting in higher premiums for consumers.
One of the main reasons for the increase in lawsuits is the rise of third-party litigation funding. This practice allows individuals to fund their lawsuits through a third-party company, who then takes a portion of the settlement if the case is successful. This has led to a rise in frivolous lawsuits, as individuals are more likely to pursue legal action when they do not have to pay for it upfront.
In addition, the cap on minor injury claims in Alberta has also been a point of contention. The current cap of $5,202 for pain and suffering has not been adjusted for inflation since it was introduced in 2004. This means that individuals with minor injuries are not receiving adequate compensation, leading them to pursue legal action for higher payouts.
The IBC has called for changes to be made to the auto insurance system in Alberta in order to address these issues. They have suggested implementing a limit on the amount of damages that can be awarded for minor injuries, as well as introducing measures to discourage frivolous lawsuits.
The Alberta government has also taken steps to address the rising cost of auto insurance premiums. In 2019, they introduced Bill 41, which aims to reduce the number of lawsuits and increase transparency in the auto insurance system. However, industry experts believe that more needs to be done in order to truly address the issue.
In conclusion, the soaring litigation in Alberta is a major factor in the rising cost of auto insurance premiums. With the number of lawsuits on the rise, it is crucial for the government and the insurance industry to work together to find solutions that will benefit both consumers and insurers.
