Alberta ruling could lead to underpricing of auto product: OSFI

Alberta’s court ruling that eliminated the province’s Cdn$4,000 cap on minor auto injury claims has led some experts to estimate that mandatory coverages in that province are under-priced by 25%, said Julie Dickson, superintendent of OSFI.

Dickson made the remark during a recent speech at the Langdon Hall Property and Casualty Insurance Industry Forum in Cambridge, Ont.

Offering her view of industry developments in 2008, Dickson stressed the dire situation of the auto market. “In Ontario, the flat premium environment is being overtaken by the inexorable rise in claims costs — quarter over quarter — with absolutely no sign of abatement,” she said.

“Overall, the Ontario industry crossed the breakeven threshold into negative territory last year.”

Also of concern, she continued, is that the Alberta ruling was based on the premise that regulations limiting damages by virtue of the degree of disability is contrary to the provisions of the Charter. “Ramifications to other tort provinces cannot be ignored,” she said.