If you own a private passenger vehicle, you’re in luck! The Alberta government will not approve auto insurance rate increases for the rest of 2023.
Freezing auto insurance rate hikes is great and all, but it doesn’t fix the root of the problem. Alberta has the highest auto insurance rates in Canada.
A 30-year-old married man driving around in a 2019 Ford F-350 would pay $4,791 out of pocket annually if he had just one accident on record in Alberta.
So, why are Alberta’s auto insurance rates so high in the first place?
The previous NDP government put a 5% rate cap in place.
When the UCP government was elected, it decided against renewing this cap. This opened Pandora’s Box. Since then, insurance premiums across the province have exploded.
In fact, insurance premiums increased as much as 30% just for basic coverage during the pandemic.
“A rate freeze does nothing to improve the affordability of auto insurance in the near term and only pushes today’s challenges down the road,” the Insurance Bureau of Canada said in a statement.
Alberta’s auto insurance freeze is the same as sweeping the issue under the rug. It won’t change the fact that Albertans will still be paying an arm and a leg for insurance when the freeze ends.
According to Finance Minister Toews, this freeze will give the Alberta government time to work with the insurance industry.
“They’re committed to work with us as a government to look for solutions to keep automobile insurance premiums as low as possible,” commented Toews.
But maybe Alberta’s entire auto insurance system needs to be burnt down and rebuilt instead. According to the Automobile Insurance Rate Board’s consumer representative Chris Daniel, a no-fault model could save Albertans as much as 10% of their insurance premiums.
No-fault insurance means you only have to deal with your own insurance company after an accident, no matter who is at fault.
In other words, chasing down the at-fault driver’s insurance company is no longer necessary. Not only does this save time, but it also eliminates some of the costs involved in settling claim disputes.
Whatever the province decides, something needs to be done. According to an annual report from Alberta’s Superintendent of Insurance, insurance companies pocketed $6.1 billion and only paid out $3.7 billion in 2021.
With their earnings so far above their expenses, surely insurers can do something to help Albertans save on their premiums, right?
