Today, the Alberta government announced significant reforms to the province’s auto insurance system. Following the announcement, Aaron Sutherland, Vice-President, Pacific and Western, Insurance Bureau of Canada (IBC), issued the following statement:
“IBC and its members welcome today’s announcement and are keen to roll up our sleeves and work with the government to ensure these reforms benefit consumers, enhance the care provided to those injured in collisions, and improve premiums for the long term. Rising legal costs are one of the key drivers of the premiums drivers pay in Alberta today, and actions to address these present the greatest opportunity for improved rates.
Reforms will take time, and the continuation of the rate cap is likely to lead to further consumer harm and a deterioration of Alberta’s competitive auto insurance market. This was highlighted in the Alberta Superintendent of Insurance’s recent annual report, which noted that 60% of Alberta’s auto insurers (24 insurance companies) suffered a financial loss last year, while warning that they expect the worsening trend in automobile insurance to continue under the rate cap.
The rate cap remains lower than the growth in the cost of delivering auto insurance, creating an unsustainable situation that is likely to lead to a further reduction in the choice and coverage available to consumers. Unless the Alberta government removes the rate cap immediately, and premiums are allowed to return to required levels, consumer savings from any reforms will be greatly diminished and competition will be further eroded.
Alberta’s insurers look forward to offering their expertise to ensure the reforms announced today are undertaken successfully and create lasting benefits for consumers when the new system is implemented in 2027. The legislative and regulatory details of these changes will be critical to its success in improving affordability for drivers while expanding the care provided to those injured in collisions.”
