Alberta’s pause on rate filings did not stop increases in insurance premiums – IBC
Alberta’s pause on rate filings did not stop increases in insurance premiums – IBC | Insurance Business Canada
Motor & Fleet
Alberta’s pause on rate filings did not stop increases in insurance premiums – IBC
“Rate caps simply don’t work”
Motor & Fleet
By
Terry Gangcuangco
The government pause on rate filings in Alberta failed to stop an increase in auto insurance premiums in 2023, according to the Insurance Bureau of Canada (IBC), which cited data from the General Insurance Statistical Agency (GISA).
According to GISA’s tracking, insurance premiums for motorists in Alberta rose by 5.24% last year, even with the suspended rate filings.
IBC Western and Pacific vice president Aaron Sutherland (pictured) had this to say about the unsuccessful move: “We’ve seen this time and time again: Rate caps simply don’t work. They don’t improve affordability for drivers and only serve to push problems down the road.
“Urgent action is needed to address the cost pressures underlying premiums to improve affordability for drivers, and it’s imperative that this work begin now.”
As noted by the IBC, the provincial government implemented a rate pause in January 2023, preventing auto insurers from applying for new rate hikes. Despite this, premiums climbed nonetheless due to several factors.
Reasons include the rates approved by the Automobile Insurance Rate Board before the pause took effect; insurers exiting the market or limiting coverages due to the cap, forcing their clients to seek potentially costlier alternatives; and rate increases for new drivers, individuals who moved, changed vehicles, or added dependents to their policies, contributing to the overall rise.
Sutherland commented further: “Rate interventions create inherent unfairness for drivers. Under normal circumstances, drivers with a history of safe driving are usually rewarded with lower rates. However, when rates are paused or capped, the mounting cost pressures in the system have to be spread across all drivers. This forces everyone to pay more, regardless of their driving history.”
Last November, the Alberta government decided to lift the rate pause, substituting it with a “good driver” rate cap as a temporary measure. The auto insurance system in the province has since faced some of the country’s highest cost pressures.
“As the government’s public engagement on the future of auto insurance comes to a close in the coming weeks, it’s imperative that work to develop reforms begins immediately,” Sutherland stated.
“Changes will take considerable time to develop, and auto insurers will then need 24 months to implement these changes so that they are reflected in consumer premiums. The province must act quickly and decisively to see improved affordability for drivers before the next election.”
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