Sorry UCP, We’ve Seen This Movie Before
Late last month, about three weeks after our firm’s New Year’s blog post calling on the United Conservative government to direct the Auto Insurance Rate Board (AIRB) to reduce car insurance premiums for good Alberta motorists, incorrigible insurance industry benefactor (and rookie provincial Finance Minister) Travis Toews instead froze auto insurance rates for Albertans at all-time highs for the balance of 2023 (or at least until the end of May, when the UCP just might be ousted by the NDP in a general election).
In rapid response, McCourt Law Offices founder and principal counsel Mark McCourt warned Alberta auto insurance consumers, in an interview on Global News TV, that this rate freeze feels a bit too much like deja vu all over again. You see, Mr. McCourt didn’t just fall off the turnip truck -- he has been representing injured victims of reckless drivers for nearly 33 years, and remembers all too well a couple of decades ago when Alberta’s Conservative government of the day froze auto insurance premiums at all-time highs. On cue, powerful lobbyists representing an auto insurance industry raking in record profits pled poverty (while laughing all the way to the bank) and successfully begged the Conservative government for regulations reducing the pain and suffering compensation insurers had to pay Albertans hurt by negligent motorists. Former McCourt Law Offices injury lawyer Brent Rathgeber KC (a maverick Conservative MLA at the time and now Chief Operating Officer of the Alberta Insurance Council) remarked, "Freezing premiums at all-time highs and regulating payouts by capping injury awards was going to be a solution to nothing. But logic is no match for pure political brute force." And Danielle Smith (at the time a Calgary Herald columnist) added, "The province can use whatever terminology it wants to try and sell this scheme, but it still stinks." So the question for Premier Danielle Smith is this: hot on the heels of a rate freeze, will the other smelly shoe to drop be yet another unwarranted gift to the insurance industry on the backs of innocent injured Alberta car crash victims, mostly women and children? Premier Smith’s predecessor, the dear departed Jason Kenney, notoriously lifted the lid (in 2019) on the rates insurers could charge Alberta motorists, and then allowed Toews (in 2020) to reduce compensatory benefits payable by insurers to Albertans injured by careless drivers. The unsurprising result of these gifts to Kenney’s insurance lobbyist pals was over-inflated premiums for good drivers, sharp reductions in insurance claims costs and excessive windfall profits in the hundreds of millions of dollars for the multi-billion dollar auto insurance industry. The Superintendent of Insurance's Annual Reports provide specific numbers, showing that after the Kenney-Toews tag team's 2019 gift to auto insurers, the industry's annual premium haul rose from $5.4B (in '19) to $6.1B (in '21), and after their 2020 gift to auto insurers, claims costs immediately plummeted from $4.5B (in '20) to $3.65B (in '21). In short, thanks to the insurance lobby's fave dynamic duo of pliable politicos (Jason & Travis), annual premiums rose by about $700 million while insurance payouts dropped by almost $900 million, padding insurers' plump profit margins at the expense of vulnerable Albertans. After freezing (but not really freezing) auto insurance premiums last week, Toews vowed to try to figure out a way to reduce rates for Alberta auto insurance policyholders. Yes, that's certainly a poser, Mr. Minister. Well here's how, Travis: order the AIRB to mandate a rate reduction. Duh!!! As we noted in last month’s blog post, there is reason to believe that Danielle Smith will not be the insurance industry patsy that Jason Kenney proved to be, but one thing is clear: given that Finance Minister Toews has shown a tendency to side with the interests of insurers over the rights of severely normal Albertans, if she does not keep him on a very short leash, ordinary Albertans may decide in a few months that we’d be better off with Rachel.