As Alberta’s auto insurance industry continues to hurt from provincial rate caps, drivers in the province may start facing more issues with their policies, said a representative from the Insurance Bureau of Canada (IBC).
Drivers will likely have a harder time getting their policies automatically renewed moving forward, IBC told Global News on Monday. The option to pay in installments may also be eliminated, while optional, non-mandatory policy add-ons — like theft or hail coverage — may become more difficult to secure.
IBC blames these developments on the rate caps imposed on the auto insurance industry by Alberta’s previous NDP government, which the bureau argues hurts the profitability — and even sustainability — of auto insurance businesses.
Under the policy, which was introduced in 2017, auto insurance companies are not allowed to raise the rates for their total books of business by more than 5% at a time. The cap will be in place until the next provincial election in August.
The rate cap had previously stood at 10%.
In January, Celyeste Power, vice president of the western region at IBC, noted that the provincial caps, in combination with other regulations imposed on the auto insurance industry, were hurting small brokerages in the provinces and could potentially force them to close shop.
Power told Global News on Monday that IBC recently issued a letter to Alberta’s premier, Jason Kenney, outlining their concerns.
“That’s something that we’re certainly concerned about,” Jason Kenney said in response. “I’d be happy to sit with the insurance bureau and discuss that.”
IBC argues that while rate caps may seem like a good way to protect consumers — Alberta’s insurance rates currently stand at the highest level since LowestRates.ca started tracking rates back in 2016 — the fact that they threaten the viability of insurance businesses means that insurers are often forced to take drastic measures to keep themselves afloat — measures that are liable to impact consumers negatively.
“Right now we have a very unhealthy market here in Alberta,” Power said.