CALGARY — Albertans could be facing a serious spike in the cost of auto insurance.
The province’s insurance industry is asking to increase basic rates by up to 40 per cent.
Jim Rivait of the Insurance Bureau of Canada says that’s the amount they need “to ensure the system is healthy and that the premiums meet the claims needs.”
The need for the dramatic increase is being blamed on the cost of soft-tissue injury claims.
In 2008, a judge ruled that a $4,000 cap on those claims was discriminatory.
The insurance industry says that ruling opened the door for claimants to sue for unlimited amounts.
“More people will be enticed to make a claim. It’s not just the amount of the claims but also the frequency that we are worried about,” said Rivait.
Last September, the province and the Insurance Bureau of Canada appealed the decision and asked that the cap be reinstated.
A panel of appeal judges is considering the request but there is no set date for when a decision will be made.
If the appeals court decides to reinstate the soft-tissue injury cap, the insurance bureau says it will seek only a seven per cent increase in auto insurance rates.
The Alberta Automobile Insurance Rate Board will soon begin hearings into insurance rates.
“It’s a matter of looking at the industry and keeping a reasonable level on them. We are representing the citizens of Alberta and trying to keep the level as beneficial to them as we can,” said Alf Savage, chairman of the rate board.
The hearings will begin in Edmonton in two weeks.