The Insurance Bureau of Canada (IBC) has published a statement highlighting new data from the General Insurance Statistical Agency (GISA) which shows insurance premiums rising in Alberta, despite the provincial pause restricting insurers from filing for any new rate increases.
The IBC says the rates continue to climb – according to GISA data published by the Automobile Insurance Rate Board (AIRB), auto insurance premiums in Alberta increased by 5.24 per cent in 2023 – as the industry implemented rates already approved before the rate freeze. The rate cap also forced some insurers to leave the market, leaving consumers to find new, often more expensive coverage. Finally, they say the rates went up because new drivers, those who’ve moved to costlier locations, changed to more expensive vehicles, got into accidents or added a spouse or dependent to their policy contributed to the overall increase in rates paid during the year.
The AIRB breaks down the increase, saying Albertans paid an average of $1,669 in 2023 for auto insurance, compared to $1,586 in 2022. The rate board, they say, was in full compliance with the ministerial order that directed it to pause rate approvals until 2024. “However, there are several ways your insurer’s approved rating program can impact your premiums without filing with the AIRB for a rate increase,” they state.
Aaron Sutherland, vice president pacific and western with IBC says the rate cap only serves to push the province’s problems down the road. The statement, however, warns that the province must act quickly and decisively to see improved affordability for drivers before the next election, as changes take nearly 24 months to be reflected in premiums.
“Urgent action is needed to address the cost pressures underlying premiums to improve affordability for drivers,” he states. “It’s imperative that this work begin now.” The pressures, well documented in other IBC statements, include legal costs and the fact that Alberta now ranks second in Canada when it comes to repair costs and stolen vehicles.
Older GISA statistics show lawsuits and legal costs associated with insurance claims jumped 31 per cent between 2018 and the end of 2023. Legal costs now reportedly account for 20 per cent of mandatory premiums. Legal bodily injury costs were projected to rise five per cent in 2024 while accident benefit costs were projected to rise 11 per cent this year. In the last three years, as of February 2024, spending on vehicle parts and repair has risen 18 per cent in Alberta, they add.
Among the IBC’s recommendations, the association is calling on the government to fix the grid framework, calling it bad public policy which charges sage drivers more to subsidize the premiums of high-risk drivers. “The grid works against the very thing the government seeks to encourage – safe driving. It’s time this subsidy is removed,” the IBC stated earlier this year. The organization has also encouraged the government to cancel its hidden four per cent premium tax on auto policies and remove the provincial health levy, they say costs $30 per policy, on average.
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