September 26, 2023 from the Edmonton Journal
In Alberta, the cost of motor insurance is rising due to lawsuits and legal expenditures, according to a recent report that was ordered by the Insurance Bureau of Canada (IBC).
Legal fees account for about 20% of Albertan drivers’ motor insurance rates, or about $200 per policy annually, according to a report by consulting firm MNP. According to the report, legal expenses are becoming more and more of a burden. Between 2018 and 2022, $1.2 billion in driver premiums will be used to pay for these fees, a 31% rise from 2018.
The survey found that once a claim is litigated, the costs granted for legal fees far outweigh cash settlements for pain and suffering. According to the research, 38% of a settlement is used for legal costs, and 15% is typically awarded to claimants for their pain and suffering.
Vice-president of Pacific and Western at IBC Aaron Sutherland stated, “Auto insurance premiums should help those injured recover following a collision, not line the pockets of personal injury lawyers.”
The insurance association claims that drivers are paying too much for the province’s “one-size-fits-all approach” and is pushing for changes to Alberta’s vehicle insurance laws.
“Alberta does not need to move to a full no-fault model like other jurisdictions — where drivers lose the right to sue — to address the legal costs facing our auto insurance system,” Sutherland stated. However, Sutherland stated there needs to be action taken to lessen the effect that these legal expenses are having on the rates that drivers must pay.
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