The government of Alberta has launched an online engagement survey to collect feedback on what the public wants and needs from their auto insurance.
In support of the consultation, the government commissioned two studies, one from Oliver Wyman and the other from Nous Group to look at the financial implications of the different reform options under consideration and the broader effects on the economy, employers and government finances.
Major errors and flaws
The Insurance Bureau of Canada (IBC) says, information about legal cost pressures on the system aside, the reports contain major errors and flaws which have resulted in incorrect and misleading conclusions. “The OW Report (the Oliver Wyman Feasibility Study of Long-Term Auto Insurance Reforms report) should not be relied upon to inform government decision-making, nor influence any public discussion regarding the future of auto insurance in Alberta,” they write.
The IBC’s concerns about the actuarial analysis found in the reports are documented in a new IBC backgrounder, Key concerns with Oliver Wyman’s Feasibility Study of Long-Term Auto Insurance Reforms.
An economic boondoggle
“The Nous report also drives home the devastating impacts of moving to a government-run insurance monopoly. The evidence is undeniable. It would be an economic boondoggle that would kill thousands of stable, private sector jobs,” the IBC says in a statement. They add that significant consumer and economic impacts are why no North American jurisdiction has moved to a public auto insurance system in more than 50 years.
“It is unfortunate that more viable solutions to reform Alberta’s auto insurance system were not explored,” the IBC states. The backgrounder also calls out the reports for using incorrect premium data for Alberta and other jurisdictions, overstating premium savings. They say the report also understates public auto insurance premiums “without explanation as to why.”
Operational costs and overruns
The discrepancies, they add, grossly skew the impacts outlined. They add that the report also omitted many operational costs and overruns incurred by public insurers which were deemed out of scope. “Many operational costs incurred by public auto insurers were deemed out of scope of the report or were stated incorrectly, skewing any savings for drivers,” they write.
Regarding legal fees, however, the IBC says it is in agreement with the government’s commissioned analysis. “The reports released today provide further evidence of the enormous financial impact that litigation costs and legal abuse are having on the auto insurance premiums that drivers pay, they write. “While IBC has concerns over significant omissions in Oliver Wyman’s actuarial analysis, the government now has further proof from an independent third party that the best way to deliver savings to Alberta drivers is by getting legal costs under control.”
The Alberta government’s survey closes June 26, 2024.
