Edmonton, Alberta — A new report from Alberta’s superintendent of insurance shows that insurers in the province earned $1.32 billion more in premiums than they paid in claims in 2020, representing a widening gap between premiums and claim payouts.
According to the Superintendent of Insurance 2020 Annual Report, Albertan insurers collected $5.81 billion, about $400 million more than the previous year, while claims totalled $4.49 billion, about $200 million less.
The report observed the steady decline of the province’s claims ratio over the past several years, noting a downward trend from 87 percent in 2016 to 77 percent in 2020. A claims ratio represents the relationship between paid claim settlements and collected premium fees.
Alberta’s official opposition, the New Democratic Party (NDP), contends that these high profits are a result of United Conservative Party (UCP) government’s 2019 scrapping of a rate increase cap on auto insurers.
“Insurance companies have been generating massive profits off Alberta drivers, and they’re doing it with the UCP’s help,” said NDP energy critic Kathleen Ganley.
“In 2020, the car insurance industry charged Alberta drivers $385 million more in premiums than they did in 2019. That’s $385 million in additional premiums. That’s $385 million more out of the pockets of Alberta drivers in a single year.”
Finance Minister Travis Toews’ press secretary, Kassandra Kitz, asserts that the rate cap forced drivers to have to pay their premiums a year in advance, instead of month-to-month, which ended up causing a five percent rate increase anyway.
The UCP government introduced Bill 41 in 2020 to update the way insurance premiums are calculated.
“We introduced Bill 41 last session that made legislative and regulatory changes to stabilize auto insurance rates, enhance medical care benefits and ensure more options and flexibility for drivers,” Kitz told the Calgary Herald.
The Insurance Bureau of Canada issued the following statement in response to the enactment of Bill 41: “The goal of changes made by the Alberta government to the auto insurance system is to help stabilize out-of-control claims costs, and ultimately help make insurance more affordable for drivers. These changes also give Albertans more and better options for care when they’ve been injured in an accident.”
Seven insurers have filed for rate reductions in 2021, according to Kitz, and across the board, premium rates for private vehicles are down by just under one percent over the year.