In a recent development, the Alberta Superintendent of Insurance has fined several auto insurance companies a combined total of over $3 million for overcharging customers between 2022 and 2024. This action underscores the importance of regulatory oversight in protecting consumers from unfair financial practices.
21 Insurers Charged for Improper Billing Practices Between 2022-2024
According to a report recently released by the Superintendent, 21 insurers have been penalized for various infractions, with individual insurers fined between $10,000 and $1 million. The issues identified included failing to apply eligible discounts to customer accounts, inappropriate surcharges, mishandling of claims, and programming errors causing incorrect premium calculations.
The insurers facing the top three most significant administrative penalties for charging automobile insurance premiums in excess of approved rates (contrary to section 602(1) of the Insurance Act) between 2022 and 2024 are:
- Security National Insurance Company: $1,000,000 penalty
- Primmum Insurance Company: $500,000 penalty
- Unifund Assurance Company: $500,000 penalty
Penalties Latest in History of Overcharging Incidents
This is not the first instance of such violations in Alberta. FAIR Alberta, a coalition of concerned Albertans dedicated to protecting consumer rights, reports Alberta insurers have been fined more than $6.4 million in Insurance Act violations since 2016.
In 2020, the Superintendent of Insurance issued 29 penalties and fines totalling $1.5 million against 16 insurance companies for charging higher rates than those approved by the Automobile Insurance Rate Board. TD Bank Group faced the most significant fines, at $885,000. Other fined insurers included Intact Insurance, Economical Insurance, and Sonnet Insurance.
In 2020, the Superintendent of Insurance cited programming errors as the cause of many overcharging incidents and noted overcharges are repaid to customers with interest. Some insurance companies echoed this in their response to the latest fines. TD Bank Group stated that a system error affected several customers’ policies, leading to overcharges. The company says that it disclosed the error to the Superintendent of Insurance and reimbursed all impacted customers with interest.
Similarly, Economical Insurance reported that a technical error resulted in both overcharging and undercharging a small number of customers until early 2019. The company advised that upon discovering the error, it refunded any overcharged amounts, self-reported the situation, and enhanced testing to prevent future occurrences.
Consumer Advocacy and Concerns
FAIR Alberta emphasizes that these findings confirm long-held suspicions about insurers prioritizing profits over fair treatment. The organization warns that without proper accountability, Albertans will continue to be exploited.
Furthermore, FAIR has expressed apprehension about the Alberta government’s plan to implement a no-fault insurance system. Critics argue that this system could grant insurance companies even more control, potentially exacerbating issues related to overcharging and reducing consumer protections. A FAIR Alberta spokesperson stated:
“No-fault doesn’t just strip Albertans of their right to hold bad drivers accountable—it shields insurance companies from scrutiny, removes consumer protections, and locks Albertans into a system where insurers call all the shots.”
Regulatory Actions and Consumer Protection
The Superintendent of Insurance’s enforcement activities include conducting reviews, imposing fines, and ensuring that affected Albertans are refunded their overcharged premiums with interest. The Government of Alberta asserts that the care-first insurance model will lead to $400 a year in savings for drivers when it’s fully implemented in 2027.
However, the effectiveness of these measures is under scrutiny. The recurring nature of overcharging incidents raises questions about the adequacy of current regulatory frameworks and the need for more stringent oversight to protect consumers.
Legal Implications and Consumer Rights
These developments underscore the importance of vigilance regarding insurance premiums and the need for consumers to be aware of their rights. Policyholders are entitled to accurate billing, with insurance companies legally obligated to charge premiums aligning with approved rates and apply all eligible discounts. In cases of overcharging, insurers must refund the overcharged amounts along with applicable interest. Transparency is critical, as customers have the right to clear information about how their premiums are calculated and any factors that may affect their rates.
If consumers suspect discrepancies in their insurance premiums, they should take the following actions:
- Review Policy Documents: Carefully examine billing statements and policy documents for inconsistencies.
- Contact the Insurer: Reach out to the insurance company to seek clarification and request corrections if necessary.
- File a Complaint: If the issue remains unresolved, file a complaint with the Alberta Superintendent of Insurance or seek legal counsel to explore further options.
In conclusion, while the recent fines imposed on Alberta insurers highlight the government’s commitment to consumer protection, they also reveal systemic issues within the insurance industry. Continuous regulatory oversight, coupled with informed and proactive consumers, is essential to ensure fair treatment and prevent future overcharging incidents.
Cuming & Gillespie LLP: Calgary Personal Injury Lawyers Providing Top-Tier Advocacy in Motor Vehicle Accident Claims
As discussed in our previous blog, Cuming & Gillespie LLP is dedicated to monitoring the unfolding changes to Alberta’s insurance industry, including how the transition to a no-fault system will impact the personal injury landscape. Our team of knowledgeable personal injury and motor vehicle accident lawyers helps injured clients navigate their auto insurance rights and helps secure the compensation they deserve. To schedule a confidential consultation, please reach out online or call 403-571-0555.