UPDATED: Alberta government reforms auto insurance system

The Alberta government will be implementing reforms to address high auto insurance rates as it explores long-term solutions. “We know that Albertans have been struggling with their auto insurance rates and that’s why we’ve been working hard to find solutions,” said Alberta Premier Danielle Smith in a Wednesday press release.“I’m pleased that we can work to bring forward these new measures to help.” With inflation and the affordability crisis making life more expensive for Albertans, Smith said the government “will continue working to ensure that the measures we take are not only affordable but also sustainable in the long run.”The Alberta government said people with good driving records would experience price protection, ensuring their insurance rates do not increase higher than inflation, which is set at 3.8%. It added these reforms would start January 1. It will be taking further action to amend regulations, ensuring insurers must offer payment plan options so Albertans would not have to pay the full amount for their coverage upfront. These changes would ensure the auto insurance industry can continue to cover claims costs and protect Alberta drivers while providing more relief to them. Additionally, changes would grant the Automobile Insurance Rate Board (AIRB) the authority to direct auto insurers to return premiums to Albertans in years when industry profits are higher. AIRB could request a rate filing from an insurer at any time to review and lower auto insurance rates if needed.Alberta Treasury Board President and Finance Minister Nate Horner said he understands the struggles many Albertans are facing and is working to ensure they can afford the coverage they need. “Achieving affordable auto insurance is a major commitment for our government, and this is only the first step in delivering on that promise,” said Horner. “We value the sustainability of the insurance industry and call for increased collaboration from insurers as we continue the work to address these issues.” Alberta Affordability and Utilities Minister Nathan Neudorf admitted affordability “continues to be a major concern for Albertans when the cost on every day essentials rises and makes it tough to make ends meet.” “That’s why we continue to build on our existing affordability measures to help stabilize costs,” said Neudorf. “This auto insurance reform will help do this in the short term.” The Alberta government went on to say it is examining more long-term solutions to make the auto industry more affordable and sustainable. With these proposed reforms for 2024, it said they would not impose a dynamic price ceiling on the rate increases insurers can request but can control how they are distributed among customers, particularly those with good driving records. Any rate increases in 2024 will be monitored to ensure they are reasonable and justifiable.It has commissioned an in-depth analysis by an external consultant about long-term reforms. A draft report is expected by the end of 2023, with the final one slated for the first quarter of 2024. Horner followed up by saying the Alberta government is looking at a gamut of solutions. “Jurisdictions within the province obviously, but also places that have an interesting record for really righting their auto insurance situation,” he said. “New Jersey comes to mind as a state that’s highlighted in the system that had a terrible track record that’s really turned things around.”Another solution he said Alberta could copy is New South Wales’ approach, which would see it offer no-fault or limited litigation system, but it is being delivered by private companies rather than government organizations. The gamut is full tort, limited litigation, or hybrid.The Alberta government paused private passenger vehicle insurance rate increases through to the end of 2023 in January. READ MORE: UCP government pausing private passenger vehicle insurance rateAlbertans expressed increased concerns about the affordability of auto insurance for personal vehicles during the inflation crisis.While rates will be paused until the end of 2023, it said it will continue developing short- and long-term solutions to steady and lower auto insurance rates.

UPDATED: Alberta government reforms auto insurance system

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