Changes implemented by the previous government to the Alberta auto insurance industry in 2017 have had unintended consequences for drivers. A Calgary Herald article published in April details how a five per cent cap has “backfired,” and is discouraging industry from operating in Alberta. The NDP government placed the cap on raises to auto insurance rates in the hopes of protecting consumers from exorbitant hikes, however LowestRates.ca, a policy comparison website, is reporting an 11 per cent overall increase in rates, which they say is due to decreased competition.
It’s important to note that those numbers are strictly from LowestRates.ca, and are likely skewed to their market. The Insurance Bureau of Canada (IBC) has registered a six per cent overall increase in rates in Alberta. The IBC is responsible for the representation of 90 per cent of Canadian insurance providers, and increasing understanding of the Canadian insurance market.
Why Did Rates Go Up?
As claims are far more expensive these days, what with new technologies such as collision avoidance systems, electronic stability control systems, and backup cameras, auto insurance companies are saying they are having a hard time filling the gap between premiums collected and expenses paid out. Insurers are losing money, they say, and some have stopped taking new customers.
Numerous contracts between auto insurance providers and brokers have been cancelled, although no companies have pulled out of Alberta entirely. But there are fewer overall options for those looking for coverage.
A Global News article published in May quotes Celyeste Power, IBC vice-president of Western Canada, who said, “Claims costs have been spiraling out of control for the past few years. Insurers are losing up to $0.30 on every single dollar that they’re bringing in.”
Unfortunately, this reported loss has led to difficulties for policyholders. The Global article tells the story of a customer who was forced to go through a lengthy renewal process, and who was also told he would have to pay his yearly coverage fees up front. The IBC says that while coverage is available, there may not be benefits provided such as automatic renewals, monthly payments, and optional coverages, which can even mean collision coverage.
Insurance companies are hopeful problems can be addressed through the new government, but the IBC warns that it’s unlikely rates will decrease. Any rate hike must be approved through the Alberta Insurance Rate Board.
How a Broker Can Help
At Lane’s, we work for you, not the auto insurance companies. Insurance brokers mitigate between you and the insurance companies we work with, providing a certain level of protection consumers wouldn’t have otherwise. Insurance broker can usually get better rates than an agent because they are free to shop around to different providers. Brokers are also sometimes offered special pricing from lenders because they have the experience and are specially trained to select the correct policy for their customers. They have a proven track record of avoiding underinsurance or unnecessary claims, which saves insurers money. In addition, because a broker works with you as an individual, they are better equipped to deal with your needs.
Factors Affecting Your Auto Insurance Rates
The best way to keep your auto insurance rates low is to maintain a clean driving record. The main factors affecting your auto insurance rates include:
- Driving record. If you have been in a number of accidents, received many moving violations, are a new driver, or have had your insurance cancelled for any reason, you will be assessed for higher premiums.
- Where you live. Those that live in high-theft areas, park in insecure parking, and who live in busy urban areas are more likely to have to pay higher premiums.
- How much you drive. The more time you spend on the road, the higher the likelihood is that you will be in an accident. Therefore, those with long commutes or who drive for a living will be placed in a higher risk bracket for auto insurance coverage.
- The type of vehicle you drive. If you have a high-value vehicle, or a type that is stolen often, or one with few safety features, you may be required to pay higher premiums.
Trust Lane’s to Help You Save
The insurance brokers at Lane’s will always try to access any available auto insurance discounts for you. Common discounts include alumni benefits, customer loyalty incentives, good driver rewards, and bundling to save. If you would like us to review your current coverage to see what sort of savings we might be able to find, contact us at our Calgary, Edmonton, Banff or greater Alberta offices.
