The Alberta government has launched a review of auto insurance in the province, saying it wants to ensure the industry can remain viable and that drivers can get affordable coverage.
Albertans pay some of the highest rates in Canada but have trouble getting critical protection, such as coverage for comprehensive or collision, Finance Minister Travis Toews said Wednesday.
But a five-per-cent annual cap on rate increases, introduced by the former NDP government and since abandoned by the United Conservative Party, is not coming back, he said.
“The rate cap simply put a Band-Aid on a wound that was festering,” Toews said at the legislature Wednesday. “In the intermediate and long term it was no solution, and even in the short term it made a bad situation worse.”
Auto insurance rates in Alberta have been rising sharply over the last five years. The trend prompted the NDP government to cap overall rate increases at five per cent annually for each insurer, starting in 2017.
The UCP government did not renew the cap in August, and some drivers have since reported getting notices of steep increases of 12 per cent or more.
Insurers have said that under the cap they were losing money in Alberta, given more payouts for car theft, injury claims, repairs and catastrophes such as the 2016 Fort McMurray wildfire.
Finance Minister Travis Toews, at the podium, accompanied by members of the review panel. From left, Shelley Miller, Dr. Larry Ohlhauser and Chris Daniel. (David Bajer/CBC)
Toews said the cap forced insurers to seek savings at the expense of drivers by, in some cases, refusing to offer critical protections.
In other cases, some clients were still hit with steep increases as long as the overall hike by the insurer to all Alberta clients remained at five per cent.
“Under the cap, we had insurers getting squeezed … so Albertans were finding themselves with fewer and fewer insurance options,” said Toews.
“We ultimately need to deal with the challenges that are leading to increased premiums … and present a reformed insurance system in this province that can serve Albertans well.”
A three-member committee has been asked to find solutions that work for all parties within the existing privately delivered system, Toews said.
In an interview with CBC News, Premier Jason Kenney said the government will use the “next six months to address out-of-control increases on personal injury awards.” Those payouts contribute to driving up costs, which are then paid by customers through their premiums, he said.
Asked about a cap, Kenney said former premier Ralph Klein put one in place in 2004.
“We’re going to look at how to have a more effective control,” Kenney said. “Something like a no-fault insurance system, which maintains a reasonable control on the awards.”
In 2004, the Klein government put a $4,000 cap on soft-tissue injuries. In the four years that followed, auto insurance premiums dropped by about 18 per cent.
Back then, Alberta’s auto insurance system was the envy of all the systems in Canada, said Celyeste Power, western vice-president of the Insurance Bureau of Canada.
Court challenges in 2012 and 2015 found some “vulnerabilities” in the definition of minor injury, she said.
“What we’ve seen from that is a huge increase in legal representation and lawsuits around that to kind of push things outside of the cap,” Power said. “Fifty-three per cent of the costs that have increased over the past five years have been associated with that.”
As a result, there are injuries considered minor in other jurisdictions that are not in Alberta. A common example of that is TMJ (temporomandibular joint) disorders, which affect the jaw muscle, she said.
‘We need to get this system fixed’
While fixing the definition of minor injury is important, Power said, there also needs to be adequate care in place to treat people who are injured in automobile collisions.
“Even if the minor injury cap is meant to capture more of these injuries, if it is a serious injury … if you have chronic pain for six months plus, and that’s considered serious, then of course you would be able to get the care and support you need,” Power said.
Clarifying the definition would likely offer stability to premium rates, she said.
“We need to get this system fixed for the three million drivers who count on it,” Power said. Drivers are “sick of increases in their auto insurance” and want more control over what they’re paying for and what they’re buying.
The committee will consult with consumers, industry stakeholders, medical experts and the legal profession.
The committee includes chair Chris Daniel, who is in his second term as the consumer representative on the Automobile Insurance Rate Board; Shelley Miller, a lawyer with expertise in auto insurance reform; and Dr. Larry Ohlhauser, who has served as medical adviser to the superintendent of insurance for the past 12 years.
The committee will report back to government in the spring 2020 legislative session.
NDP’s Service Alberta critic weighs in
Jon Carson, the NDP’s Service Alberta critic, wants to see what comes of the panel but said he is worried that Albertans will continue to pay more for auto insurance in the meantime.
“The fact is, we’re already several months past when this government said they were going to take action, and nothing has been done up to this point,” Carson said.
“So, we’re very concerned that now we have to wait several more months before any decision comes forward, whether it’s actually protecting Albertans in their pocketbooks or not.”
Carson said he disagreed with the finance minister’s assessment that the five-per-cent rate increase cap introduced by the previous NDP government “made a bad situation worse.”
“What we would have liked to see is that cap to stay in place, and then we can move forward with this committee discussion,” Carson said. “But to preemptively get rid of that cap and then say we’re going to come up with a solution. They’ve made a committee now to cover up the fact that they are the ones who’ve affected consumers so negatively at this point.”
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
