What will Alberta’s new government do with auto insurance?
Published: April 23, 2019
Updated: June 3, 2019
Author: Luke Jones
CATEGORY: Car Insurance
Alberta is undergoing a government change with the newly elected United Conservative Party (UCP) ready to take the provincial helm. Many questions surround the new government, among them what will happen to auto insurance brokers and carriers in Alberta?
UCP Leader Jason Kenney has suggested private auto insurance companies may see more freedom. While not mentioning insurance specifically, Kenney used his victory speech to say his government will “cut [Alberta’s] its red tape burden by at least one third” and will have the “lowest taxes in Canada”.
Insurance insiders are now assessing how these goals will impact the industry. Just a day after the election closed, the Insurance Bureau of Canada (IBC) sent a public congratulations to the UCP party and pressed the issue on auto insurance changes:
“Alberta consumers are facing significant issues with auto insurance,” IBC said in its statement “Local brokers and agents are also feeling the impacts of the issues in the system and this is affecting communities across the province.”
Following suit, the Insurance Brokers Association of Alberta (IBAA), said brokers are “looking forward to working with the new government to continue to make property and casualty insurance accessible and affordable in Alberta.”
Profitability of the auto insurance market in Alberta will likely be the focus of the industry. Last month, Canada’s Property and Casualty Insurance Compensation Corporation said the province’s auto system was not profitable. Insurers in Alberta have been unable to increase rates by more than 5% since 2017 when NDP Finance Minister Joe Ceci capped rate increases. PACICC says the restriction is unsustainable as claims costs continue to rise and insurance companies in the province are losing money.
The auto insurance cap is likely to figure heavily in any discussions regarding auto coverage. During its campaign, UCP did not make auto insurance one of its nine election pledges. IBAA has posted a template on its website stating the system in Alberta is in crisis. The association points to four ways consumers are being impacted by the auto insurance cap:
• “Clients are electing not to insure their vehicles — they cannot afford to pay 100% of the premium up front as carriers withdraw payment plans.”
• “With companies withdrawing from the auto market and brokers scrambling for alternate markets, the consumer is left with fewer insurance options.”
• “Long-term clients are being asked to re-apply to their existing carrier via new applications.”
• “Good drivers are subsidizing poor drivers to make up the shortfall in rates.”