Alberta school bus contractors face another year of large insurance rate hikes

Alberta's smaller school bus contractors were hit with insurance increases of up to 50 per cent — on top of last year's 358 per cent increase — when their insurance renewed on Nov. 1.

Ernie Smith in Edson, Alta., is one of the many contractors affected by these increases.

This month, the owner of Col-Ern Holdings and a bus driver for the Grande Yellowhead Public School Division saw his insurance premium increase to $6,500 per bus from the $4,500 it was previously. The year before that, he was only paying $1,400.

"If it rises again next year, I'm afraid I'm going to have to shut the doors," said Smith. "I can't take another hit of another $2,000 increase for insurance."

To be able to continue running his business this year, Smith had to sell his only two spare buses, used for field trips and as backups. Now, he's down to operating with only two buses and no options if those buses break down or need to be serviced.

He says there are about 500 small contractors across Alberta, and if rates keep going up the way they have been, they'll have to park all their buses because they can't afford the insurance.

This could cause potential shortages of school buses and drivers — ultimately disrupting children's school bus service across the province.

Mark Critch, president of the Alberta School Bus Contractors' Association, says small- and medium-sized contractors are taking the biggest hit on insurance. This year, larger contractors saw increases of only 25 to 35 per cent.

The association's website explains, "No other insurance providers are willing to insure operators with less than 25 bus routes, leaving small contractors with no option."

It isn't just insurance. Critch says costs for training, parts and fuel are also continuing to climb.

"Contractors have nowhere left to turn. This insurance is just the final nail in the coffin for many," said Critch.

No clear reason for price hikes, association says

Critch says the association still doesn't fully understand why prices have increased so dramatically. He says they were told that 2019 had high claims, which are subsequently increasing insurance rates today.

"We've tried to get to the bottom of it over the last few months," said Critch.

Aaron Sutherland, vice-president of the Insurance Bureau of Canada's Pacific region, said insurance rates are increasing across various industries because they're seeing more lawsuits coming forward from injuries, as well as dramatic increases in the payouts.

Commercial liability claims have increased by 108 per cent between 2013 and 2020 across Canada, he adds.

"As we see more incidents of litigation and the court awards increasing, that's increasing costs and increasing the claims that insurers are paying out for liability coverages," said Sutherland.

Essentially, anyone who needs liability insurance is experiencing the hikes, he says.

Liability insurance claims in Alberta totalled $608 million in 2019, following $537 million in 2018 and $337 million in 2017.

But Critch says the association, and operators across the province, deserve to know more.

"The problem with that is we didn't get enough information to tell us where those claims came from, what the claims were and when they occurred. So we truly don't have a very good picture of it."

Contractors call on insurance firms, UCP government

Kathy Fenton, owner of Fenton Bus Lines which services Rocky View Schools, saw her insurance increase from $2,200 to $3,900 per bus annually. Fenton says she recognizes that as a medium-sized company with 29 buses, she isn't paying rates as high as Smith is facing with just two buses.

But she says that's part of the problem.

"The insurance is not looking at the whole picture," said Fenton. "The insurance company just takes everybody, they throw them into one pot and the little guys are the ones that get melted away."

Ultimately, Fenton says there is one solution to this problem: the provincial government needs to speak with insurance companies, figure out who is getting into accidents and get them off the road instead of increasing costs for all contractors.

"We have to look at the government, the people leading our country," said Fenton. "What is wrong with them? Why do they not care about our children and how they're getting there?"

Fenton and Smith say the responsibility falls on the provincial government, which removed the five per cent cap on increases to auto insurance in 2019, implemented by the previous government, run by the NDP.

"I would really like to see the UCP government step up to the plate and say, 'Look, these insurance companies are just getting ridiculously carried away,'" said Smith.

If things don't change, the contractors say school boards and parents could expect disruptions to their school bus service, forcing parents to make those trips themselves.

Calgary school boards watching for shortages

In a statement to CBC Calgary, the Calgary Board of Education said its drivers have faced some challenges in providing coverage when there is a driver absence, a mechanical issue or a delay at a previous school. 

"While the majority of CBE routes are covered daily, there are currently approximately 20 routes (or two per cent of over 800 runs) that do not have a regular assigned driver," said CBE.

The city's other big school division, the Calgary Catholic School District, told CBC Calgary in a statement that it has not experienced noticeable driver shortages to date, but its carriers "are advising that driver shortages may occur at some point during the school year."

CCSD says it's reviewing the rising insurance costs for school buses as well as potential assistance options for contractors.

Otherwise, transportation for Calgary school boards has been running as usual.

Critch says school boards in Alberta have offered their support by writing letters and advocating for operators, but very few boards are offering financial assistance this year.