Alberta strikes panel to review auto insurance, won’t bring back rate cap

EDMONTON — Alberta is reviewing auto insurance in the province to ensure that the industry can remain viable and drivers can get affordable coverage.

Finance Minister Travis Toews says Albertans are paying some of the highest rates in Canada but are having trouble getting critical protection such as comprehensive and collision coverage.

But a five per cent annual cap on rate increases, introduced by the former NDP government and abandoned by his United Conservatives, is not coming back, he says.

“The rate cap simply put a Band-Aid on a wound that was festering,” Toews said at the legislature Wednesday.

“In the intermediate and long term it was no solution, and even in the short term it made a bad situation worse.”

Auto insurance rates in Alberta have been rising sharply in the last five years. The trend prompted the NDP government to cap global rate increases at five per cent annually for each insurer starting in 2017.

The new UCP government did not renew the cap in August, and some drivers have since reported getting notices of steep rises in rates of 12 per cent or more.

Insurers have said that under the cap they were losing money in Alberta, given more payouts for car theft, injury claims, repairs and catastrophes such as the 2016 Fort McMurray wildfire.

Toews said the cap forced insurers to seek savings at the expense of drivers by, in some cases, refusing to offer critical protections.

In other cases, individual clients were still hit with steep increases as long as the overall hike by the insurer to all Alberta clients remained at five per cent.

“Under the cap, we had insurers getting squeezed … so Albertans were finding themselves with fewer and fewer insurance options,” said Toews.

“We ultimately need to deal with the challenges that are leading to increased premiums … and present a reformed insurance system in this province that can serve Albertans well.”

A three-member committee headed by Chris Daniels has been asked to research and recommend solutions that work for all parties within the existing privately delivered system.

The committee is to report back in the spring. Toews said the government will take action as soon as possible after that.

Daniels, consumer representative on the Automobile Insurance Rate Board, said there is no single reason for rising costs, although technology has made what used to be minor damage no longer minor.

“The new cars have a tremendous amount of technology,” said Daniels. “A lot of the sensors of those new technologies are located in the windshield, so you have a windshield replacement that used to cost maybe $300 is now costing $1,500.”

Opposition NDP critic Jon Carson said the cap was keeping rates affordable for drivers, and he wants to see the evidence that some drivers are being denied comprehensive and collision coverage.

“We believe the five-per-cent cap on fees was fair. If the UCP government does not believe that it was working … I would encourage them to release those documents to show that,” said Carson.

The Insurance Bureau of Canada said it welcomes the review, particularly as it relates to injury claims.

“Increases in payouts for minor injuries have led the average claim size to increase by nearly 10 per cent per year,” bureau vice-president Celyeste Power said in a statement.

“Alberta’s three million drivers have said they want more affordable premiums, more choice, and care they can count on when they need it.”

This report by The Canadian Press was first published Dec. 18, 2019.

Dean Bennett, The Canadian Press

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

RCMP, city, health officials join forces in problem-property crackdown

Eastview property had generated recurring complaints to RCMP

Mag 7.7 quake hits between Cuba and Jamaica, but no injuries

HAVANA — A powerful magnitude 7.7 earthquake struck in the Caribbean Sea… Continue reading

Trump peace plan delights Israelis, enrages Palestinians

WASHINGTON — President Donald Trump unveiled his long-awaited Mideast peace plan Tuesday… Continue reading

GOP squirms as Bolton prepares to dish on Trump White House

WASHINGTON — For much of the last 20 years, John Bolton was… Continue reading

More than 200 cabinet-appointed positions remain empty, says memo to PM

OTTAWA — Prime Minister Justin Trudeau has been warned that more than… Continue reading

Country music fans enjoy free concert at Red Deer mall, ahead of ACMA awards

Fans like to get up close and personal and that’s exactly what… Continue reading

Your community calendar

Feb. 1 A Jump Rope Competition will be held at the Abbey… Continue reading

David Marsden: Let’s see success at Westerner Park

It’s encouraging that Westerner Park has admitted it needs the support of… Continue reading

Mag 7.7 quake hits between Cuba and Jamaica, but no injuries

HAVANA — A powerful magnitude 7.7 earthquake struck in the Caribbean Sea… Continue reading

Trump peace plan delights Israelis, enrages Palestinians

WASHINGTON — President Donald Trump unveiled his long-awaited Mideast peace plan Tuesday… Continue reading

GOP squirms as Bolton prepares to dish on Trump White House

WASHINGTON — For much of the last 20 years, John Bolton was… Continue reading

More than 200 cabinet-appointed positions remain empty, says memo to PM

OTTAWA — Prime Minister Justin Trudeau has been warned that more than… Continue reading

Alberta climate plan part of cabinet decision on oilsands mine: Wilkinson

OTTAWA — The federal cabinet’s decision on a huge new Alberta oilsands… Continue reading

Things for people in Canada to know about the coronavirus

Two cases of the new deadly strain of coronavirus have been identified… Continue reading

Most Read