Alberta government pausing private passenger vehicle insurance rate increases

While no new rate increases will be approved for the remainder of this year, the government says some Alberta drivers may still see rate increases on their renewals in 2023. This may be due to previously approved rate changes, changes to driving records including at-fault claims and tickets, or changes to insurance profiles such as a new address or a different vehicle being insured.

Alberta’s government says it has also heard concerns that some Albertans faced challenges with having to fully pay their annual auto insurance premiums upfront. To help address this, the government says it is now requiring insurance companies to provide most Albertans with the ability to pay their premiums through payment plans.

Alberta’s government says it implemented reforms in fall 2020, which are expected to further stabilize rates. However, factors such as inflation and supply chain issues for auto parts are said to have impacted the effect of reforms in the short term.

Provincial officials say Alberta’s insurance market is being closely monitored and the government will continue to look at options for further improvements.

Consumer tips

In Alberta’s competitive marketplace, Albertans can often get better rates by shopping around and exploring their options.
Albertans should continue to work with their insurance companies or brokers to get the best rates.
Alberta drivers can get discounts of up to 20 per cent for bundling their home and property insurance, in addition to discounts for good driving behaviour.
Alberta has a unique consumer protection in the grid rating system. Insurers must look at the grid premium and their own premiums and charge the lesser rate for basic automobile coverage.

NDP Finance Critic Shannon Phillips released the following statement in response:

“The UCP has announced a fake freeze. By their own admission, Albertans could still see their rates increase this year.

“The UCP lifted the rate cap brought in by our Alberta NDP government and insurance premiums skyrocketed. Auto insurance rates went up as much as 30 per cent during the pandemic — a time when Albertans were driving and working less — and the UCP did nothing.

“Now Albertans are paying for the most expensive auto insurance in the country in the midst of the worst affordability crisis in 40 years.

“For years, the UCP claimed rate caps don’t work. Only weeks ago, Danielle Smith and Travis Toews blocked Alberta NDP legislation that would have immediately put a real freeze on insurance rates.”

Meantime, the Insurance Bureau of Canada (IBC) says today’s announcement is disappointing for insurers and, most importantly, for consumers, a suggestion also supported by the Insurance Brokers Association of Alberta.

“A rate freeze does nothing to improve the affordability of auto insurance in the near term and only pushes today’s challenges down the road,” reads a statement from the IBC.

“Rate caps have resulted in significant negative consequences for consumers when undertaken previously in Alberta and elsewhere. During Alberta’s last provincial rate cap from 2017 to 2019, consumers faced challenges securing the coverage they needed, as insurers were forced to take action to remain viable and continue paying customers’ claims. Premiums still increased 12 per cent when the rate cap was in place.

“In California, drivers are also living through the pitfalls of their government’s decision to freeze rates two years ago. There, individuals, families and businesses have faced challenges obtaining the insurance they need because insurers have been forced to limit the sale of new policies to remain viable. Some insurers have even been forced to close, reducing choice and competition for consumers.

“Alberta’s auto insurers are keen to work with the government and all stakeholders to bring better, more affordable auto insurance options to Alberta’s 2.8 million drivers. To that end, IBC and its members have proposed options that would result in an average of $325 in premium savings for drivers. While premiums remain stable today, the government must undertake urgent reforms needed to truly address the costs that are putting pressure on the auto insurance system and on the premiums of Alberta drivers.

The role of insurers in Alberta’s economy, according to IBC:

The property and casualty (P&C) insurance industry directly contributes $1.2 billion to Alberta’s real GDP and provides over $500 million in provincial taxes annually.
Approximately 23,000 people work directly in Alberta’s P&C insurance industry. For every 100 jobs created in the P&C insurance industry, 42 are gained in other industries in Alberta. The total economic footprint associated with the P&C insurance industry supports 37,775 jobs in Alberta.
Alberta’s P&C insurers provided $460 million in premium relief and deferrals to help customers during the pandemic. For auto insurance, that works out to an average of $151 per eligible policyholder.

by rdnewsNOW Staff

Alberta government pausing private passenger vehicle insurance rate increases

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