Auto insurance rates expected to increase in New Year
EDMONTON -- Albertans could see their auto insurance rates shoot up next year, as the industry says a rate increase cap by the previous government and the rising expense of vehicle claims have been costing companies about 12 cents on every dollar.
While CTV News Edmonton contacted several insurance companies and brokers, most were unwilling to put a number to the anticipated hikes.
However, the CEO of the Insurance Brokers Association of Alberta said he expected rate increases to match a double-digit difference many companies have been experiencing.
"On average over the past year or so, companies have been losing approximately 12 per cent," IBAA's George Hodgson said.
"So in other words, for every $100 they collect in premiums, they're paying out $112 in claims."
Two companies confirmed hikes to CTV News Edmonton. Desjardins Insurance said rates will increase next year by 15 per cent, a reflection of the "rising number and cost of claims."
Wawanesa Insurance confirmed it has been approved for a 12.1 per cent average rate hike after a review by the Alberta Automobile Insurance Rate Board.
A spokesperson for the company said premiums are rising throughout the industry.
"The cost of auto-repairs has gone up significantly with more technology built into vehicles, crash rates have gone up due to more distracted driving, and damage from hail, high winds and increasingly severe storms mean more Canadians are turning to their insurance provider for help," Wawanesa Insurance's Brad Hartle said in an e-mailed statement.
"As a result, every premium dollar we received last year, we paid out more in claims and expenses."
The anticipated hikes follow the expiration on Aug. 31 of an auto insurance rate cap, implemented by the previous NDP government in 2017.
It capped insurers' province-wide income from premiums at five per cent—meaning that while some consumers saw rate increases higher than five per cent, their provider's across-the-board bump didn't exceed the limit.
The Insurance Bureau of Canada's western vice president called the cap effectively a Band-Aid solution, causing segregation within the consumer base and failing to address systemic issues.
"There are problems in the system and unfortunately, for the past four years, they were ignored," said IBC's Celyeste Power.
"Insurers don't want rates to increase. They'd prefer to bring the costs out of the system but they're highly regulated and they can't do it on their own, so we're hoping to work with the government on some solutions that help make insurance more affordable."
Power wants to see the industry enabled to provide more options to consumers to customize for their coverage and budget.
As well, IBC wants the province to change regulations so that fewer costs are spent on legal representation and payouts in cases of minor injuries.
"Right now instead of getting the care that they need, it’s mostly being put out through legal settlements and cash payouts, and that’s not working for consumers. One, it’s driving up costs significantly, and two, it doesn’t actually help anyone get better and get back on their feet more quickly," Power told CTV News Edmonton.
"For example, if you have minor injury and you’re in a car accident, you can get access to physio, chiropractor, doctor. But for some reason you can’t—in Alberta, it’s not under the regulation—to get access right away, no questions asked, to dentist, psychologist."
Instead, Power said IBC has noted more people with minor injuries hiring a lawyer to go above the cap.
"They’re saying they have injuries that are not available to them in the care that’s available. So why not give them the care?" she asked.
In a statement to CTV News Edmonton, the government only said it "is clear that our automobile insurance system as it stands today is not sustainable" and that it would be "considering a wide range of options" to address issues.
In the meantime, Albertans have been told rate increases will vary from insurer to insurer, as well as driver to driver.
For example, the province's rate regulator, the Alberta Automobile Insurance Rate Board, announced in late September a 15-per cent increase to the grid rate level, which sets maximums insurance companies can charge for basic coverage.
A small minority of drivers, just six per cent, are rated according to the grid, such as less-experienced motorists who have an opportunity to move up the scale as they gain experience and history without claims and convictions.
The 15-per cent grid hike is effective the first day of the New Year.
A couple of Edmontonians said the anticipated hikes were disappointing.
"Finding that out is really disturbing, but I'm budgeted to the hilt already," said one.
Another succinctly added, "That sucks."
With a report by CTV News Edmonton's Nicole Weisberg