A Summary of Bill 41, the AIAC Report, and Changes to MIR
Summary of Bill 41
On October 29, 2020 the Government of Alberta tabled some proposed amendments to Alberta’s Insurance Act through Bill 41, the Insurance (Enhancing Driver Affordability and Care) Amendment Act, 2020 which received first reading.
The proposed amendments were described as part of a larger package of short-term measures intended to stabilize costs, enhance medical benefits, and modernize the delivery of auto insurance in Alberta. Below, we highlight the key changes that are proposed in Bill 41.
Right to Call Expert Witnesses
Bill 41, if passed, would limit the number of experts that can be used in automobile injury litigation for injury claims. Bill 41 proposes that, subject to the regulations:
- A party to a motor vehicle injury proceeding in the Court of Queen’s Bench in which the value of the claim for motor vehicle injury damages is $100,000 or more shall not tender expert evidence at trial of more than three experts on the issue of motor vehicle injury damages.
- Where the value of the claim for motor vehicle injury damages is less than $100,000, a party shall not tender expert evidence at trial of more than one expert on the issue of motor vehicle injury damages.
- With the consent of all other parties, a party may tender at trial expert evidence of one or more additional experts.
- Parties to a motor vehicle injury proceeding may appoint a joint expert;
- On application by a party, the Court may allow expert evidence of one or more additional experts to be tendered.
- This amendment would apply to every motor vehicle injury proceeding commenced on or after January 1, 2021.
Direct Compensation for Property Damage
Under the current system in cases where insured motorists have optional property damage coverage, sustain property damage, and were not-at-fault, their insurers will arrange for repairs and then seek to recover the amounts paid from the at-fault motorist’s insurers under a process known as subrogation.
- Bill 41 proposes that the insurers will process the costs of repair directly in any event of fault, thereby eliminating the time and administrative costs of subrogation.
- An insured may recover for damages to the insured’s automobile and its contents and for the loss of use of the insured’s automobile and its contents from their insurer. A driver who caused the collision will continue to be found responsible for the purpose of assessing appropriate rate adjustments.
- If the insured is not satisfied that the degree of fault under the fault determination rules accurately reflects the actual degree of fault, then the insured may bring an action against the insurer.
- If a dispute arises because the insured is not satisfied with the amount of a proposed settlement, the dispute must be determined using the dispute resolution process set out in the Insurance Act.
- An insurer, except as permitted by the regulations, has no right of indemnification from or subrogation against any person for payments made to the insurer’s insured.
- Bill 41 would also see a change in the rate and start date for pre-judgment interest on non-pecuniary “pain and suffering damages” from an automobile collision.
- Bill 41 proposes that in an action “for loss or damage from bodily injury or death arising directly or indirectly from the use or operation of an automobile” a Court shall not award interest under that section for any period before the earlier of:
- the day in which the Statement of Claim commencing the action is served on the Defendant; or
- the day in which the Plaintiff provides written notice to the insurer of the Defendant of the Plaintiff’s intention to make a claim in respect of the loss or damage from bodily injury or death.
- Bill 41 proposes that interest in respect of damages for non-pecuniary loss in an action for loss or damage from bodily injury or death, arising directly or indirectly from the use or operation of an automobile must be calculated in the same manner as interest awarded on pecuniary damages.
Bill 41 also includes provisions to the sections of the Insurance Act related to the Automobile Insurance Rate Board, premiums for basic and additional coverage, offences, and penalties under the Act.
Summary of the Fundamental Reform of the Alberta Automobile Insurance Compensation System Report
Concurrent with the tabling of Bill 41 by the UCP Government, a 536 page report was released on October 29, 2020 by the Automobile Insurance Advisory Committee. The report is titled “Fundamental Reform of the Alberta Automobile Insurance Compensation System” (the “AIAC Report”). In December 2019, a three-member committee was directed to explore options to reform Alberta’s automobile insurance system. The committee members included a member with a background in the consumer and insurance industry, a lawyer and a physician. The committee’s mandate was to develop and provide recommendations for Alberta’s automobile insurance systems.
Below, we provide a brief summary of the committee’s findings and conclusions.
In the preparation of the AIAC Report, the committee reviewed the history of automobile insurance reform from 1946 to the present across the Canadian provinces and elsewhere, judicial decisions in terms of constitutional authority of the Province and legal commentary on the implications of automobile insurance reform, and examined relevant scientific health studies and actuarial evidence. The committee also received input from the public, including service providers by way of public surveys, written submissions, and consultations with service providers.
The committee concluded that the optimal and only solution to produce long-term stability to auto insurance pricing in Alberta is replacement of the existing hybrid model blending tort and no-fault compensation with a pure no-fault traffic accident care and compensation model.
The committee’s pure no-fault model is characterized by the following central features:
- Implementation of an administrative traffic accident regulatory structure to replace the Court for assessment of extensive injuries and pecuniary losses to injured persons;
- Assessment of injuries, extent of recovery or impairment, and requisite future treatment determined by an expert medical review panel within two years from the accident date for most cases and within three years for all remaining cases;
- Defined rehabilitation and care benefits and, in the case of the most seriously injured, impairment benefits to replace lump sum payments for pain and suffering; and
- Assessment of economic losses and future care entitlements determined by financial, vocational, and rehabilitation expert review panels within two years from the accident date for most cases and within three years for all remaining cases.
The committee recommends the establishment of a Traffic Accident Regulator, to be funded primarily by insurers to oversee all operations and act as the authority of last appeal. A Traffic Accident Regulator would:
- Serve as a tribunal for oversight of claims processes to ensure fair determination and provision of claimant’s health and financial entitlement to benefits;
- Provide oversight of health and medical treatment, assessment, and evaluation of permanent injury to ensure fair determination and provision of claimant’s entitlements to health benefits;
- Provide oversight of claims assessment panels to ensure fair determination and provision of claimant’s financial entitlement to benefits and compensation;
- Establish liaison and exchange of relevant information with a Traffic Insurance Regulator; and
- Be structured in a manner similar to the current Alberta WCB model.
The committee recommends that the Traffic Accident Regulator establish four administrative arms to oversee specific aspects of the pure no-fault accident compensation system, including:
- Accident claims administration and support to help claimants advance claims for treatment, benefits, and economic losses;
- Certified and qualified medical experts to determine an injured person’s extent of recovery and impairments;
- Claims assessment panels comprised of financial and vocational experts to determine income replacement; and
- A reconstituted Automobile Insurance Rate Board formed as a Traffic Accident Board.
The committee recommended a redesigned continuum of care model with care programs for all categories of injuries. For injured persons who suffer a temporary non-permanent injury, in addition to the treatment provided under the care protocols, the proposed model provides a fund referred to as a rehabilitation maintenance account. The model also contemplates a specialized pure no-fault long-term care program for catastrophically injured persons.
The UCP Government has indicated that more consultation will take place over the coming months on whether it will follow through with the recommendation in the AIAC Report to move to a no-fault auto insurance system in Alberta.
Changes to the Minor Injury Regulation
New Orders in Council effective November 1, 2020 to the Minor Injury Regulation, Diagnostic, and Treatment Protocol Regulation and the Automobile Accident Insurance Benefits Regulation pursuant to the Insurance Act include:
- Increasing access to more health professionals including dentists, psychologists, and occupational therapists as providers of adjunct therapy, and implementing the $1,000.00 limit on expenses payable for such therapy.
- Defining a certified examiner to now include a dentist.
- Broadening the definition of a minor injury in an accident to a sprain, a strain, or a whiplash associated disorder (“WAD”) injury “caused by the accident that does not result in a serious impairment and includes, in respect of a sprain, strain or WAD injury that occurs on or after November 1, 2020, any clinically associated sequelae of sprain, strain or WAD injury, whether physical or psychological in nature, caused by the accident that do not result in a serious impairment”.
- Increasing the limits under various headings for recoverable payments, expenses, and benefits.
If you have any questions regarding the summary above, please feel free to contact any member of our Insurance & Risk Management Industry Group.