Edmonton, Alberta — If there are two things the insurance industry and the “Real Housewives” series have in common, it is a stupefying propensity for drama and scandal, as has unfolded Thursday when the Alberta government announced an immediate cap on auto insurance rates through to the end of the year.
Announced in a joint release from the province’s ministry of finances and affordability and utilities, the Alberta government says it will be “taking action on insurance” through this rate cap, as well as a mandate for insurance companies to allow customers to pay premiums through payment plans.
“Affordability is a primary challenge facing many Albertans as rising inflation makes it challenging for many to afford necessities, including auto insurance,” said minister of affordability and utilities, Matt Jones.
“We are taking decisive action to protect Albertans from increased costs while working to keep Alberta affordable.”
This move, which is regarded as a further step toward rate stabilization on the part of government, has already been met with criticism from the Insurance Bureau of Canada (IBC) who see it instead as kicking the can further down the road.
“Today’s announcement of the government’s decision to freeze insurance rate filings for private passenger vehicles is disappointing for insurers and, most importantly, for consumers,” read part of the IBC’s response to Thursday’s announcement.
“A rate freeze does nothing to improve the affordability of auto insurance in the near term and only pushes today’s challenges down the road.”
The IBC contends that during previous rate cap periods in Alberta, namely from 2017 to 2019, many customers struggled to secure their coverage as insurers lagged on making payouts, despite still experiencing a 12 percent premium increase while the cap was in place.
The organization also cites cases in California as an example, pointing toward past rate caps that forced insurers to limit their policy options in order to remain viable, effectively reducing choice for consumers and competition for insurers.
Finally, the IBC says it is willing to work with the Alberta government to expand on a plan that it says could result in an average premium savings of $325 per driver in the province.