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Driver fares are expected to increase unless urgent action is taken.
EDMONTON, AB, February 7, 2024 Alberta’s auto insurance formula faces some of the same charging pressures in Canada, according to new insights from the General Insurance Statistics Agency (GISA), a statistics firm created and overseen by provincial insurance regulators.
Legal fees now account for a larger portion of auto insurance premiums paid through drivers in Alberta than elsewhere in Canada. Legal and litigation costs are twice as high as in Ontario and more than 3 times higher than in some Atlantic provinces.
GISA data also shows that Alberta ranks second in Canada for the amount spent per claim to repair cars and how often cars are stolen. With auto insurance premiums already among the highest in the country, rates in Alberta will likely rise if the province doesn’t urgently address those pressures.
“Insurers in Alberta are willing to urgently work with the government to fight rate pressures facing premiums and find strategies for auto insurance affordability for drivers,” said Aaron Sutherland, vice president for the Pacific and West at the Insurance Office of Canada (IBC). . ). ” Unfortunately, the moves taken so far (adding Alberta’s rate cap for smart driving forces) do not address the underlying costs of the driving forces policy and will contribute little to the value that the driving forces will pay in the future. “
Auto insurance premiums in Alberta continue to face pressures due to a variety of factors, including the following:
Lawsuits and legal fees related to insurance claims have increased to 31 per cent in Alberta since 2018 and now account for 20 per cent of premiums.
Physical injury liability rates (i. e. , legal fees) will increase by up to 5% in 2024. 1
Accident benefit prices will increase by up to 11% in 2024. 2
Spending on vehicle parts and maintenance increased by 3. 5% in December 2023. Over the past three years, those prices have increased by as much as 18% in Alberta. 3
The Alberta health care levy on auto premiums went up 28.2% in 2023.
Cash settlements for minor injuries under Alberta’s Minor Injury Regulation went up 4.2% in 2023.
More vehicles are being stolen. According to the latest data, the cost of vehicle thefts is up 39% across Alberta.4
As the provincial government continues to explore long-term reforms, IBC has put together a list of opportunities to improve the affordability of auto insurance. If implemented, those measures could save drivers an average of $325 per year.
Take urgent action to reform the auto insurance system. IBC’s “Better Care, Greater Choice” proposal offers drivers more coverage while doubling the care provided to those injured in collisions. Best of all, it can save drivers an average of up to $200 off the required premium.
Fix the Grid. Alberta’s Grid framework is bad public policy and charges safe drivers more to subsidize the premiums of high-risk drivers with a history of at-fault claims and infractions. The Grid works against the very thing the government seeks to encourage – safe driving. It’s time this subsidy is removed.
Eliminate the tax on insurance premiums and the provincial fitness premium. The government imposes a hidden 4% tax on car insurance policy premiums. Eliminating this tax would save drivers about $65 according to the policy. In addition, the province imposes an eligibility tax on auto insurance, adding an additional $30 according to the policy.
For more information, www. albertaautoinsurancefacts. ca/.
About Insurance Canada
The Insurance Bureau of Canada (IBC) is the national industry agreement that constitutes Canada’s personal home, auto and business insurers. Its member corporations make up the vast majority of the asset and casualty insurance market in Canada. For more than 50 years, IBC has worked with governments across the country to help all Canadians have affordable home, auto and business insurance. IBC is the vision of consumers and governments who trust, price and personal asset and accident insurance sector. He advocates on key issues and is helping teach consumers how to better protect their homes, cars, businesses and property.
For press releases and more information, visit the IBC Press Center in www. ibc. ca. Follow us on X (formerly Twitter) @InsuranceBureau and like us on Facebook. If you have questions about home, auto or business insurance, please contact IBC’s Consumer Information Center. at 1-844-2ask-IBC.
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1 Semester of the AIRB.
2 AIRB Semi-Annual Review.
3 Canada Statistics, December 2023.
4 Fairness analysis of GISA data.
Fast Facts
Average Premiums and Average Claim Size in Canada
When comparing premiums to those in other jurisdictions in Canada, whether auto insurance is provided through a public or personal system, it is vital to look at the average length of claims and the price of premiums paid.
NPM Report: Legal Fees Increase Auto Insurance Prices in Alberta (IBC Press Release) A new report from consulting firm MNP shows that legal fees and other costs related to collision lawsuits have a significant effect on auto insurance premiums in Alberta.
Deloitte Report: Good Drivers Continue to Subsidize Premiums for High-Risk Drivers. The Insurance Bureau of Canada (IBC) has commissioned Deloitte LLP to compare the scoring formula of Alberta’s auto insurance network and provide recommendations to better align the network’s framework with its original intent. The report found that in 2021 alone, Grid meant drivers paid an average of $65 more to subsidize bad drivers.
IBC’s Enhancing Care & Expanding Choice ProposalIBC has developed its Enhancing Care & Expanding Choice proposal, leveraging best practices from other jurisdictions to improve the quality and affordability of auto insurance in Alberta. Enhancing Care & Expanding Choice gives drivers more control over their auto insurance, while doubling treatment and care for those injured in an accident. Coupled with regulatory improvements and efforts to reduce the tax burden for drivers, this proposal saves drivers $325 on average.
SOURCE: Insurance Bureau of Canada
Watch the content to download media: http://www. newswire. ca/en/releases/archive/February2024/07/c1313. html