On November 1, 2023, the Alberta government held a press conference with to announce changes to the auto insurance landscape for Alberta. Key takeaways from the press conference include:
- An end to the Alberta auto insurance rate freeze on December 31, 2023
- New legislation to enforce the existing insurance provider limit of 6%
- New legislation to make payment plans a permanent option in Alberta
- Defining what makes someone a "safe driver"
The full press conference is available below.
End to the Alberta Auto Insurance Rate Freeze
In January 2023, the superintendent of Insurance for Alberta announced a temporary rate freeze for auto insurance premiums. This rate freeze meant that insurance companies were not allowed to increase the rates they were charging for the remainder of the year. Depending on when your renewal came through, you may have seen changes in your 2023 auto premiums.
With the end of this rate freeze, insurance companies will again be allowed to apply for rate increases with the Auto Insurance Rate Board. It is important to note that Auto insurance premiums can still be impacted by standard factors.
- Change in location or vehicle
- An at-fault accident on your record
- Driving convictions
Enforcing The 6% Profit Allowance For Insurance Companies
Insurance companies in Alberta have long been held to the benchmark of 6% profit. This new legislation will give the AIRB (Alberta Insurance Rate Board) the capacity to better enforce this target. Legislation is not yet complete for this measure, although it is in the works and will likely be in place for 2024.
It has been suggested that if a company experiences greater than 6% profit for a given year, the excess could be returned to policyholders.
Keeping payment plan options available for Albertans
When the 2023 rate freeze was announced, the superintendent of insurance set out guidelines for all insurers to allow payment plan options under most circumstances. This meant that unless an individual had fallen under the criteria of having had payment issues in the past, they had to be offered some form of payment plan option. This wasn't necessarily monthly payments for all companies, three-pay options were also considered a payment plan.
The new legislation coming in 2024 will likely regulate insurance providers to permanently offer payment plans unless the insured person has met exclusionary criteria.
Rate increases limited for Safe Drivers
The Alberta government also announced they will limit rate increases for "safe drivers". Increases to auto insurance rates, for "safe drivers", will not be permitted to exceed Consumer Price Index for the preceding year (usually between 1-5%). This will only impact renewals where no information has changed over the previous year. New policies, change of residency, and instances where the driver changes their vehicle, will not be included in the rate cap. This cap is expected to last until new reforms can be made to Alberta auto insurance in the coming months and years.
Alberta Defines What a "Safe Driver" Is
The Alberta government worked with the insurance industry to build define what makes a safe driver in Alberta. Here is the list:
- No at-fault accidents in the past 6 years (comprehensive claims will not impact)
- No criminal code violations in the past 4 years (example: a DUI)
- No major convictions in the previous 3 years (example: distracted driving)
- No more than 1 minor conviction in the previous 3 years (example: speeding)
Other Alberta Insurance News
- More information on Alberta insurance reform is likely to follow in the coming months
- The Alberta grid rating system is also likely to see some reform
- The goal is to maintain a competitive insurance landscape with affordable options for consumers
HAVE ANY QUESTIONS?
If you have any questions or concerns about the Alberta insurance reform you can contact your local MLA.
Want to get in touch with someone at Armour? Click the link below.
