The Alberta government on November 1 announced that it will undertake a number of new regulatory measures to curb the cost of insurance in the province for consumers, but even the province’s minister of finance says the efforts don’t change or get at current input costs in the system. 

The Insurance Bureau of Canada issued a statement in response saying the measures announced threaten the viability and competitiveness of the auto insurance system.

The province says it will ensure that those with good driving records will not receive rate increases higher than inflation. Additionally, the Alberta Automobile Insurance Rate Board (AIRB) will be given the authority to direct insurers to return premiums in years when profits are higher. The rate board will also be able to request rate filings from insurers at any time and possibly direct them to lower rates if needed.

“We value the sustainability of the insurance industry and call for increased collaboration from insurers,” says the province’s minister of finance and president of the treasury board, Nate Horner, who also thanked insurers.

The current rate pause in the province will remain in effect until the end of 2023. The government has also commissioned management consulting firm, Oliver Wyman to provide an in-depth analysis of the industry and longer-term reforms. The report is due out in the first quarter of 2024. “The results of this analysis will inform the government’s long-term reforms,” they state. The province is reportedly paying $500,000 for the report. 

“Drivers with good records will not see their insurance rates increase beyond inflation. Because people who follow the rules of the road should not be punished when they’ve done nothing wrong,” says the province’s premier, Danielle Smith. The report, she says, “will not result in us telling insurers how to run their businesses. That is not the purpose of government,” the minister added, before going on to list the changes her government intends to make. 

The ministers say the province will additionally mandate insurers to offer flexible payment plans. It will also amend regulation “so insurers cannot charge rates that are too high during unforeseen events. This was the cause during the pandemic when people were driving far less than usual. We will take steps to protect Albertans against that kind of thing from happening again,” the premier said, making no mention of pandemic rebates paid to consumers after the fact. The minister of finance, in turn, called the rebates “limited.” 

In addition to the current rate freeze, the rate board has been given the authority to reduce the maximum allowable profits insurance companies can include in their rate filing applications. It also intends to amend regulations placing restrictions on how rate increases are distributed among ratepayers “to ensure fairness”.

Notably, in a question-and-answer period with reporters, Horner admitted that the measures will do nothing to curb costs for insurers. “Nothing in this package really gets at costs, the costs associated with your auto insurance. It does move some things around; it gives the rate board more teeth to apply when dealing with the insurance companies,” he says, “but the actual costs in the system when you compare us to other jurisdictions? This is not getting us there.” 

The IBC estimates that the rate cap would apply to approximately 80 per cent of Alberta’s drivers. “Rate caps have been implemented before in Alberta and elsewhere with the same result – less choice and more expensive coverage,” they state.