Mounting problems are squeezing Alberta’s Auto Insurance market

Published: July 19, 2019

Updated: August 1, 2019

Author: Luke Jones

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Alberta’s auto insurance issues are coming at insurers from two places, says one broker in the provinces. Insurance companies are stopping coverage for some risks, so brokerages are unable to fund protection for certain risks. At the same time, customers who do purchase auto insurance are being squeezed by high premiums and are struggling to make payments.

“The challenge is availability – that’s a huge piece of it. Being able to provide coverage to a client at any price [and] being able to actually secure it for them – right now that’s becoming more prevalent where those who are not pristine risks [are penalized so] that it’s almost impossible to place the proper forms of coverage at reasonable deductibles and prices with the ability for them to pay for it,” said Jonathan Brown (pictured), commercial and personal lines producer for Peters Insurance Agencies.

Brown points to an Ipsos survey conducted for accounting firm MNP that found more than half of Canadians are only $200 over being unable to pay bills or cover debt. Brown says brokers must be more dynamic in their payment structures to meet the needs of customers.

“Part of the challenge for us to address is that we need the ability to provide payment options beyond pay in full at time of signing because most Canadian families – and I would say that it would fall along those lines as far as those market reports are concerned – are unable to pay for their insurance in full, especially if they have more than one vehicle as well as a property. Where we’re seeing the challenge is that if we can’t secure a payment plan and we can’t secure physical damage coverage, many of them are unable to retain their vehicles because of the requirements of their finance companies. That’s definitely a concern.”

Because of the problems surrounding the auto insurance market, Alberta is increasingly becoming a hotbed for motorists driving without insurance. Brown says insurance companies must do more to remove barriers that prevent consumers purchasing coverage.

“We understand the need for our insurers to make changes within their books of business, and that a business model where you are spending $1.30 for every dollar you bring in is not a sustainable business model, and that has to be addressed,” he said. “But, we certainly are hopeful that they will maybe be more willing to work with us, as far as helping those people who truly need help and yet still do it in a way that sustains their business model.”

Reform is necessary, including lobbying for changes from all brokers, insurers, and the Insurance Brokers Association of Alberta (IBAA).

Yet for the system to truly change, all stakeholders have to be involved in pushing for reforms, included the Insurance Brokers Association of Alberta (IBAA), and the broader broker community.

“Personal auto in Alberta is broken, and we’re doing everything we can as an association and then as individual brokers to fix it. The responsibility, I think, lies with all of us, insurers and brokers alike, to address those challenges,” said Brown.