Auto insurance will get a lot more expensive for Alberta drivers as of January 2020 with premiums expected to increase as much as 15%.
The increases come after an auto insurance rate cap implemented by the previous NDP government expired on Aug. 31. Jason Kenney’s United Conservative Party government has opted to scrap the 5% cap.
The Insurance Bureau of Canada (IBC), the national industry association representing Canada’s private home, auto, and business insurers, called the former cap a “band-aid solution”.
“There were issues in the system, they needed to be addressed, there were fixes to make that would have actually saved consumers money," said IBC western vice-president Celyeste Power. “Those fixes were not made, they were ignored and the cap was put on as a band-aid that would essentially push rates down the road for consumers.”
The IBC believes the planned price increases are also driven by the increasing frequency and cost of claims in Alberta.
"On average over the past year or so, companies have been losing approximately 12 per cent," the Insurance Brokers Association of Alberta George Hodgson told CTV News.
Albertans have already started expressing their concerns about the rate increase.
"I remember hearing ‘we want more money in the pocket of everyone’. Maybe that meant big companies," tweeted one user in response to the announcement.
“My car insurance increased by 40% from last yr. & that's w/a clean record & all discounts applied. Was shocked. My broker said it's because of all the claims out there. Policyholders have 2 cover it. Shopped the market & it was higher elsewhere. Worried what next yr's rate will be,” a driver added.
According to City News, Power said the best advice she can give to drivers is to keep looking for the lowest rate.
“There are 45 insurers in the market here in Alberta, it’s a competitive market. Insurers don’t want to raise rates on consumers, they want to keep their consumers, they want to get new consumers. They will be out there competing for business.”
The hike is effective as of New Year’s Day.