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

‘Pointing out the obvious:’ Alberta govt stands by energy minister’s comments

EDMONTON — Alberta’s energy minister isn’t backing away from her comments that… Continue reading

Twenty-nine of Canada’s 48 national parks to reopen to day-use visitors June 1

More than half of Canada’s national parks — including Banff in Alberta,… Continue reading

More Albertans are recovering from COVID-19

69 more recoveries Tuesday, bringing the total to 6,048

VIDEO: Procession to honour Snowbirds Capt. Jennifer Casey comes to Halifax

Snowbirds service member died in a crash in Kamloops one week ago

Calgary bans businesses that claim to change sexual orientation or gender identity

Calgary bans businesses that claim to change sexual orientation or gender identity

Canada outspends Ireland, Norway in new pledging on Venezuelan refugee crisis

Canada outspends Ireland, Norway in new pledging on Venezuelan refugee crisis

‘I can’t live on:’ Daughter of man fatally shot by Regina police seeks answers

‘I can’t live on:’ Daughter of man fatally shot by Regina police seeks answers

Alberta legislature to resume with COVID work, other bills, sitting into July

Alberta legislature to resume with COVID work, other bills, sitting into July

Walt Disney World presenting plans for reopening parks

Walt Disney World presenting plans for reopening parks

‘Amazing Race Canada’ wins big on second night of Canadian Screen Awards

‘Amazing Race Canada’ wins big on second night of Canadian Screen Awards

Quebec to loan up to US$200 million to struggling Cirque du Soleil

Quebec to loan up to US$200 million to struggling Cirque du Soleil

UNB board votes to strip name from law faculty building over links to slavery

UNB board votes to strip name from law faculty building over links to slavery

Most Read