Canadian Bar Association releases report finding auto insurance industry would be healthy without insurance cap



    EDMONTON, June 16 /CNW/ - A new study for the Canadian Bar Association
(CBA) finds the automobile insurance industry would continue to be highly
profitable even if the $4,000 cap on payments for soft tissue injuries were
removed. The study - Alberta's Minor Injury Regulation: Automobile Insurance
Profits, Premium Rates, and Costs - was prepared independently for the CBA by
Economica Ltd.
    "This report supports our view that the cap denies Albertans the right to
access justice," said Tom W. Achtymichuk, Q.C. of the Canadian Bar
Association. "It demonstrates the insurance industry was profitable and that
insurance claims were not out of control prior to introduction of the cap."
    The report found the rate of return on equity for Alberta automobile
insurance averaged six per cent (or nearly $70 million) from 1998 to 2002 and
then jumped to more than 20 percent in 2003 prior to the Minor Injury
Regulation. Bodily injury and property damage claims each rose by roughly
20 per cent per vehicle from 1996 to 2003 while premiums rose by nearly 65 per
cent; an increase that cannot be explained by changes in administrative costs
or rates of return on insurers' investments.
    "Even with no cap on damages, the auto insurance industry would still
earn reasonable profits," said Achtymichuk.
    Introduced by the provincial government in October 2004, Minor Injury
Regulation legislation was found to be in violation of the Canadian Charter of
Rights and Freedoms by Associate Chief Justice Neil Wittmann in February 2008.
Shortly thereafter, the Alberta government made a decision to appeal the
ruling.

    About the Canadian Bar Association

    The Canadian Bar Association (CBA) is dedicated to improving the law and
the administration of justice. More information on the CBA is available at
www.cba.org.
    The Canadian Bar Association is a national association which supports
access to justice, including access to independent courts to decide fair
compensation for every injured person.





For further information:

For further information: Tanja McMorris, NATIONAL Public Relations, T:
(403) 531-0331, E: tmcmorris@national.ca

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CANADIAN BAR ASSOCIATION

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