Rate increase of 40.2% needed if Alberta MIR not reinstated

If the eventual Supreme Court decision confirms the strike down of Alberta’s minor injury regulation (MIR) Insurance Bureau of Canada (IBC) has recommended a 40.2% rate increase for basic personal auto coverage.
IBC retained a consulting actuary, Ron Miller, to prepare an analysis of the indicated adjustment to premiums for the basic auto insurance product as of Nov. 1, 2009.
In its written submission to the Alberta Automobile Insurance Rate Board, IBC referred to the ‘Miller Report’ which suggested a rate increase of 7.8% if the decision striking the MIR is overturned, and an increase of 40.2% if the decision striking down the MIR is upheld.
“In our view, until a final determination is made whether the MIR will remain struck down or will be restored, large uncertainties will remain as to the values of the eventual ultimate claim counts and amounts for third party liability-bodily injury for recent accident periods,” the Miller Report said.
“In view of the extraordinary risk to future market stability posed by the constitutional challenge in the province, we urge the AIRB to reflect on this observation in considering the evidence from IBC and others participating in this process to determine this year’s annual rate adjustment for the mandatory product,” IBC said in its submission.
“In particular, we want to caution the board against erring on the side of the most optimistic actuarial assumptions, simply because they are conducive to keeping auto insurance rates as low as possible in the short term.”