Alberta’s insurance industry is under scrutiny, after a new report revealed that 21 provincial insurers have amassed $3.1 million in penalties since 2022, for a range of violations, including overcharging customers and mishandling claims.
These revelations generate fundamental questions regarding business practices, government enforcement, and the province’s intended switch to a “no-fault” vehicle insurance system.
Major Violations and Fines
According to the report from Alberta’s Superintendent of Insurance, insurers were fined between $10,000 and $1 million for violations including:
- Charging premiums above approved-rates;
- Compensating unauthorized insurance agents;
- Engaging in unfair practices when handling claims; and
- Using unapproved endorsements to alter auto insurance
One of the most notable penalties was the $300,000 fine against Definity Insurance Company in 2022, for overcharging private automobile insurance customers. Other insurers, including Security National Insurance Company and Canada Life Assurance Company, have faced repeated fines over the years for similar infractions, with penalties increasing significantly over time.
A Growing Problem Despite Increased Fines
While the government has increased fines to deter misconduct, the continued violations suggest these penalties may not be enough to change insurer behaviour. FAIR Alberta Spokesperson, Jackie Halpern, argues that insurers are breaching the rules despite steeper consequences, highlighting a need for stronger regulatory action.
The provincial government maintains that overcharges were due to “accidental system and human errors,” and affected customers have been reimbursed with interest. However, consumer advocates remain skeptical, pointing to the pattern of repeated violations.
Impact on Alberta’s Proposed No-Fault Auto Insurance System
The report comes at a crucial time, as Alberta prepares to transition to a no-fault auto insurance system by 2027. Under this system, drivers will no longer be able to sue at-fault parties for injuries. Instead, compensation will be paid by their own insurers at government-set rates.
Premier Danielle Smith argues that the shift will reduce premiums—by an estimated $400 per year—while cutting legal costs and expediting compensation for accident victims. However, critics, including Halpern, warn that giving insurers more control in a system already plagued by violations could leave Albertans vulnerable.
“It’s not that they shouldn’t be given more rights,” Halpern said, “but they shouldn’t be given more control under a no-fault system.” She argues that removing the right to sue could ultimately hurt consumers rather than save them money.
Premium Increases in the Meantime
Until the new system takes effect, insurers have been granted permission to increase rates by up to 7.5% annually. This includes a 2.5% surcharge to account for rising costs from natural disasters including wildfires and hailstorms.
For consumers already struggling with high insurance costs, these increases—combined with the industry’s track record of overcharging—raise concerns about affordability and accountability.
What’s Next for Alberta Drivers?
The ongoing violations and fines highlight deeper issues within Alberta’s insurance industry. As the province moves toward a “no-fault system,” the effectiveness of regulatory enforcement will be critical in ensuring fair treatment for consumers.
In the meantime, drivers should stay informed, review their policies carefully, and report any suspected overcharges or unfair practices. The debate over no-fault insurance is far from settled, and the coming years will determine whether the new system truly benefits Alberta drivers—or simply hands more power to insurers.
Original Article: https://epaper.calgaryherald.com
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