Edmonton, Alberta -- An association representing Alberta’s insurance brokers says the number of drivers unable to secure in-province auto coverage is rising.
The Insurance Brokers Association of Alberta is warning drivers that it may be difficult to secure insurance as auto insurers have scaled back or terminated coverage due to the rate cap.
The Alberta Insurance Rate Board introduced a rate cap for safe drivers, effective January 1, 2024, to replace the rate pause in effect since January 2023. Under the rate cap, safe drivers—who do not have any at-fault collisions in the past six years, criminal code violations in the past four years, major infractions and more than one minor infraction in the past three years at the time of renewal—are given a limit of how much their auto insurance premium can increase each year. This percentage is tied to the annual Alberta Consumer Price Index, and the current rate is 7.5 percent.
Unlucky Albertans are now left “dangerously underinsured,” says the IBAA.
“An insurance broker is a driver’s best resource to secure the best coverage at the best possible price. Unfortunately, as auto insurers reduce available coverages or withdraw from the Alberta market due to the rate cap, brokers are increasingly unable to find coverage options that are both accessible and affordable for many drivers in the province,” said Jhnel Weller-Hannaway, chief executive officer of IBAA, in a press release.
“Though the intention of the rate cap is to ease the cost burden for good drivers, the system isn’t working, and the province must immediately remove this policy so the competitive market can return to health ahead of reforms,” she said.
According to the IBAA, drivers with a history of claims or roadside infractions and those whose insurers have left the province and must find a new carrier and owner lease vehicles will likely find it more difficult to secure coverage.
Albertans currently pay the second-highest premiums in Canada, which will eventually increase the number of drivers without proper insurance coverage. The rate cap is a cause of concern for the IBAA, which worries that the limited availability of required coverages will lead to “increased premiums as insurers attempt to recover inevitable losses,” as stated in the press release.
In an effort to reform Alberta’s auto insurance system, the government passed legislation that will shift the province to a no-fault insurance system known as the Care-First model. According to the IBAA, however, the benefits of adopting a no-fault model will be hampered because of the imposition of the rate cap as well as other growing cost pressures.
“There is still time for the government to succeed in its goal to build a better, more affordable system,” said Weller-Hannaway. “We implore the government to lift the rate cap so that competition and choice can return to the market. We strongly recommend adoption of reforms that focus on care, while improving premiums cost and accessibility for consumers whether or not they are involved in collisions.”
