We hate to be the bearer of bad news, but this affects us all and it is important that Albertan's understand why insurance rates are increasing this fall. There is no short term fix, but the industry is working with the Government towards a solution. With the Alberta auto insurance rate cap being lifted this September, insurance companies have applied for, and been granted, rate increases by the AIRB (Alberta Insurance Rate Board). We are expecting to see rate increases from all insurance companies on renewals and new policies starting in November.
How Much Will My Insurance Increase
Because of the suddenness of the rate cap each insurance company was sitting with different rates prior to the cap leaving them with different needs to become rate adequate today. We expect the result of these increases to create more stable pricing among insurance companies in Alberta. From what we've seen so far, we're expecting there to be an average of somewhere around a 15% increase in the Alberta auto insurance premium.
Why Are the Rates Increasing?
Put simply, the cost of auto insurance claims far exceeds the current level of premiums. Auto insurance in Alberta has been in crisis since 2016. Insurance companies have been paying as much as 130% of their collected premiums out in claims costs, and that is simply unsustainable. Some of the reasons for these rapidly increasing claims costs are:
- Increased cost of parts for your vehicle and labour for completing repairs.
- Increased litigation on for pain and suffering claims with large legal fees and settlements.
- A rise in distracted driving industry-wide, which has resulted in more frequent and severe accidents.
- Car insurance fraud, a costly trend that affects the whole industry.
What Can be Done?
There is no immediate fix for this. Insurance companies are working with the government to find a solution that would lower claims costs and allow for lower insurance premiums, but this will take time. We're happy to see that the current Alberta Government has been working with our industry on these issues and are hopeful they will continue to work towards finding a solution that will benefit all Albertan's.