The Alberta government has announced that it will not approve any more automobile insurance rate increases for the remainder of the year, prompting industry associations to raise the specter of viability and availability in calling out that government’s decision.
“Today’s announcement of the government’s decision to freeze insurance rate filings for private passenger vehicles is disappointing for insurers and, most importantly, for consumers. A rate freeze does nothing to improve affordability of auto insurance in the near term and only pushes today’s challenges down the road,” writes the Insurance Bureau of Canada (IBC) in a statement following the announcement.
They say rate caps have resulted in significant negative consequences for consumers, both in Alberta and elsewhere. “During Alberta’s last provincial rate cap from 2017 to 2019, consumers faced challenges securing the coverage they needed.” At the same time the association says premiums still increased 12 per cent.
“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,” the IBC continues. “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 association says the property and casualty industry contributes $1.2-billion annually to Alberta’s gross domestic product and generates more than $500-million in provincial taxes annually.
The Insurance Brokers Association of Alberta echoes the concerns, saying it has also proposed options to the government.
“The recent announcement regarding a freeze to Alberta’s auto insurance rates is troubling,” they write, saying the move will add more strain to an already fragile business segment, particularly with inflation increasing the cost of repairing vehicles. “There will be underlying consequences that the average consumer may not be aware of and they need to be prepared for them. Consumers are unlikely to see any direct financial relieve as a result of a rate freeze.”
They add that the move will destabilize the market if the rate freeze is kept in place long term. “During the most recent cap, insurance companies were forced to make difficult business decisions of which the effects are still being felt today they state. “A hard freeze on rates will have an even more detrimental impact on consumers.”
