When the Government of Alberta paused private auto insurance rate increases early this year, the hope was that drivers would begin to see improved affordability and some relief from skyrocketing inflation costs. Unfortunately, according to Alberta Auto Insurance Facts (AAIF), this hasn’t been quite as successful as hoped. The AAIF says that “Alberta drivers are facing significant challenges obtaining the coverage they need due to less choice and competition, all while premiums continue to rise.”
In response, through the Insurance Bureau of Canada (IBC), Alberta’s auto insurance companies have provided the government with alternatives they say can help drivers save up to $325 a year. Among their recommendations are:
- The removal of the “hidden” 4% Insurance Premium Tax, which is added on to the sale of every auto insurance policy in the province and costs $60.
- $65 in savings can be achieved by removing the provincial grid system, which forces good drivers to subsidize the premiums of bad drivers.
- Doubling treatment and care provided to the injured and giving drivers more choice and control over their coverage will result in $200 in savings.
Enhancing Care and Expanding Choice
The IBC’s proposal is titled “Enhancing Care and Expanding Choice” and includes a great deal of data compiled by the General Insurance Statistical Agency, which serves as the statistical agent for insurance regulators across Canada, including Alberta. Some points of interest include:
- In 2021, the average written premium in Alberta was $1,578. Only Ontario’s was higher, at $1,642. The IBC estimates that the average 2022 premium in Alberta will be slightly higher again, at $1,587.
- Over the past 10 years, Alberta’s insurers recorded a combined loss ratio of 104.0%, meaning they paid out slightly more in claims than they took in for premiums. The years of 2020 and 2021 were the first two years in more than a decade that Alberta’s auto insurance companies made an underwriting profit (meaning they took in more through premiums than they paid out in claims), a fact that is attributed to the people driving far less during the pandemic. As a result, insurers provided $254 million in premium relief and rebates to consumers between 2020 and 2021.
- Alberta’s private insurers have lost $220,860,000 on the sale of auto insurance over the last 10 years.
- Drivers are now back on the road, and even more so than before the pandemic. In March 2023, the total distance travelled by Alberta drivers was 21% greater than in March 2019.
Why previous auto insurance rate freezes did not work
Some Albertans may remember another rate cap imposed by the Alberta government on auto insurance between 2017 and 2019. The IBC says this freeze was not successful because underlying costs were not addressed. Because of this, insurers were forced to reduce coverages to remain viable and be able to continue to honour auto insurance claims. This led to drivers not being able to find the coverage they needed. In California, where rates have been frozen for two years, insurers are limiting the sale of new policies, with some even being forced to close up shop, reducing choice and competition for consumers.
More ways to save on your auto insurance
While Alberta drivers wait on action from the IBC’s proposal, there are ways to save on your auto insurance rates in the meantime:
- Access the assistance of an insurance broker. Insurance brokers such as us at Lane’s are able to find lower auto insurance rates than your average agent. We can compare and contrast the policies of several different providers in order to find the best fit for you and earn discounts through our ability to properly match people with the correct coverage.
- Remember you can change companies at any time. When you receive your renewal notice from your insurer, contact an insurance broker to see what other options are available to you. Generally, auto insurance holders have 30 days to negotiate different coverage for themselves before their policy will be automatically renewed. Within those 30 days you can change companies without issue. You can still change companies outside of the renewal window, however you may need to pay a penalty. We can help you figure out whether the savings we can provide will make changing make sense.
- A clean driving record is the very best way to keep your premiums down. Practise defensive driving habits, be careful and aware of others on the road, and consider driving as a privilege, not a right.
- Change your vehicle. Owning certain types of vehicles will result higher insurance rates, such as those that are stolen more often, those that have higher accident rates, those that are more expensive to repair, and so on. If you are looking to buy a different vehicle, ask an insurance broker what type may allow you to access lower rates.
- Drivers enrolled in usage-based insurance programs can earn a one-time discount of up to 10% for initially enrolling, and by demonstrating good driving habits after a certain amount of time can earn a further discount of up to 25% your total auto insurance costs.
- Bundle your policies. If you are an auto insurance holder who also has home or tenant insurance (or other) policies, you may be able to access discounts by bundling your policies together with one company.
- Insurance brokers also have access to a number of different types of discounts to help find you lower auto insurance rates.
Get more from your insurance with Lane’s
Lane’s Insurance is a leading Alberta-based brokerage, offering highly competitive rates on auto insurance and all other insurance needs. We are pleased to serve homeowners and business owners throughout the province. Contact us at:
