Edmonton, Alberta — A new report from MNP prepared for the Insurance Bureau of Canada (IBC) indicates that the Alberta government’s automotive insurance cap is negatively impacting drivers in the province with automotive insurance costs projected to rise by 87.6 percent between 2023 and 2033.
According to the report, factors influencing the province’s insurance system include:
- The growing complexity of modern vehicles, coupled with their enhanced quality, has increased repair and maintenance expenses, as advanced features now require specialized parts and skilled labour for servicing.
- Increased legal representation by those injured in collisions.
- Increases in auto theft claims have led to rises in associated costs.
- Increases in auto claims due to extreme weather events.
- Increases in the Alberta government’s health levy on auto insurance, which is intended to recover the cost of providing health care services to those injured in auto accidents.
The report further notes that “in an attempt to address affordability concerns in the province and stabilize auto insurance premiums paid by drivers, the Alberta government has implemented a series of price controls. In 2023, a rate pause was introduced, which meant that the Automobile Insurance Rate Board (AIRB) could not approve rate filing increases through December 2023.”
Similarly, “this was replaced by a rate cap of 3.7 percent for Albertans that fall under the government’s definition of a ‘good driver,’ along with an overall cap on rate filings of 10 percent.”
Key findings from this most recent report indicate that “despite the implementation of the rate pause in 2023, total claim costs, which includes third-party liability, accident benefits, collision and comprehension, rose 6.5 percent.”
As claim costs have grown, so, too, have driver premiums increased, with the average premium increasing 5.2 percent in 2023, according to MNP’s report.
Finally, “according to the AIRB, with claims costs rising by over five percent annually, drivers that do not qualify for the rate cap will pay substantially more. As of September 15, approved rate filings were averaging 7.53 percent—almost four percentage points above the cap. This suggests that non-good driver rate increases will average 15 percent or higher in the coming years.”
The report concludes that while “the “good driver” rate cap was introduced to moderate premium increases for drivers who have not had at-fault claims, it does not directly address the underlying factors contributing to rising claim costs,” and this, if not addressed, will continue to negatively affect both the province’s insurance industry and drivers.
To see the full report, click here.
The post Claim Pain: New report indicates that automotive insurance costs in Alberta could increase 87.6 percent by 2033 appeared first on Collision Repair Magazine.
