Auto insurance rate hikes coming to Alberta, new numbers show

EDMONTON — New numbers confirm that many Alberta drivers are getting hit with rate hikes, and even some sharp spikes, in their auto insurance.

The Automobile Insurance Rate Board says that 27 insurers operating in Alberta were granted rate hikes in recent months, ranging from less than one per cent to almost 30 per cent for basic coverage on private passenger vehicles.

But the board, in its latest report, stressed that it now expects the changes to work not only for insurers, but also for drivers who were having trouble getting the coverage they needed under the old rate cap.

“Following nearly two years of rate restriction, some Albertans found it difficult to obtain the coverage they required or access to payment plans,” said the board in its fourth quarter report, issued Friday.

“These actions by insurers were directly related to their inability to receive approval for rates commensurate with the risk.

“The (board) expects insurers who received approval for a rate increase to cease practices that limit access to certain coverages for Albertans.”

The board said more than 92 per cent of the insurers offering coverage for private vehicles asked for rate changes.

The move comes after the insurance industry warned repeatedly that sharply rising payouts in recent years had put it in a financial squeeze, and those problems were worsened when a five per cent ceiling on rate hikes was imposed two years ago by the former NDP government.

Last fall, the new United Conservative government lifted that cap, saying it wasn't working because some Albertans were not able to access certain non-mandatory coverages or payment plans.

Celyeste Power with the Insurance Bureau of Canada said the new hikes are about 10 per cent on average per insurers, but that average will vary widely depending on driver records and how many drivers each firm insures.

She said the increase is not a surprise.

“Insurers actually don't want to increase rates. They would rather keep their customer happy, give them the best rate possible,” said Power.

“But we have seen increasing claims costs over the past few years that have become quite unsustainable, and that's when you see premiums follow.”

She said she hopes longer term reform will come from a provincial panel currently reviewing the entire auto insurance system to determine ways to improve it for the industry and drivers.

The panel is to report back in the spring.

Alberta Finance spokeswoman Jerrica Goodwin, in a statement, stressed that the board makes its rate decisions independent of government.

“Today's release shows many companies with combined rate hikes below five per cent,” said Goodwin.

“Given the numerous options available, we encourage Albertans to shop around for the best rate.

“We will be taking action in the coming months to address long-term affordability in a sustainable manner.”

Jon Carson, the Opposition NDP critic on auto insurance, said the five per cent cap was reasonable, noting some firms in the latest report managed to keep their hikes to five per cent or less.

He urged the government to bring the cap back, adding that the UCP removed it last August with no consultation.

“Albertans are paying hundreds of dollars more in auto insurance alone and that's very concerning,” said Carson.

This report by The Canadian Press was first published Jan. 10, 2020.