Alberta’s Auto Insurance Industry Crisis Continues to Frustrate Players
Affordable auto insurance coverage for Albertans has become increasingly difficult to obtain in the last 18 months. If you’re a new driver or requesting a more extensive insurance package, you may be out of luck.
If your insurance broker has called to tell you they can’t provide you with the auto insurance rates you were expecting or any coverage at all – you’re not alone.
The cap on Alberta’s premium hikes started in November 2017. The former NDP Government implemented a 5 percent average cap on insurance rate increases for a year. This was later extended until August 2019. Before 2017, the cap for insurance rate increases was 10 percent a year.
At the same time, claim costs continue to rise partly due to new auto technology that is more expensive to repair.
All players in the insurance industry are bearing the brunt, as well as consumers whose rates are rising and have fewer options available for when they’re out on the road. There is speculation that some insurance companies may pull out of the province all together but nothing has happened yet.
How does this impact the auto insurance consumer?
- Fewer insurance products available
Auto insurers are now losing millions of dollars. It’s as simple as this – they’re paying out more money in claims than they’re receiving in premiums. The end result is causing a crisis in the industry: insurance companies stopping contracts and limiting the products available in the market.
- Less access to payment plan options
In some cases, people are getting turned away from getting insurance or are requested to pay for the total annual premium amounts up front, instead of easier monthly payments. With Alberta having the third highest insurance rates in the country, for some consumers, an annual cost upfront is a huge dent in their pocketbook.
While the “all-comers insurance” rule helps to insure most people driving in Alberta, this only includes third-party liability and accident benefits. Collision and comprehensive coverage is not mandatory vehicle insurance coverage in the province.
- Less innovation that you’ve come to expect
One of the auto reform measures that will be presented to the UCP Government by IBC (Insurance Bureau of Canada) and the provincial broker association (IBAA) will include introducing innovative products and services to the insurance industry, such as wearable technology which will affect rates and premiums set by insurance companies.
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