The government of Alberta allowed the provincial rate cap on auto insurance to expire on Saturday with no immediate plans for a replacement policy.
The rate cap was introduced in 2017 by the previous NDP government to address high auto insurance rates across the province. Under the cap, Alberta’s insurance regulator, the Automobile Insurance Rate Board (AIRB), could not approve auto insurance increases of more than 5%.
Previously, the cap had stood at 10%.
“Allowing this limitation to expire is necessary to ensure a sustainable industry that can best serve the needs of Albertans,” Charlotte Taillon, of Alberta Finance, told CBC News on Friday.
"Our government will allow the Automobile Insurance Rate Board (AIRB) to fulfil its mandate in setting auto insurance rates.”
Taillon added that insurance companies are still required to apply for rate increases with the AIRB.
The rate cap has faced criticism over the past two years, particularly from the insurance industry. Insurance companies argued that the cap, in combination with Alberta’s “take all corners” rule that bars insurers from rejecting any customer applications, made it difficult for smaller brokerages and companies to stay financially afloat.
In spite of the rate caps, the average premium grew from $1,251 to $1,316 between 2017 and 2018, according to the Insurance Bureau of Canada (IBC).
NDP leader and former Alberta premier Rachel Notley said that her government had introduced the rate caps because the AIRB had approved too many applications for premium increases from insurance companies.
“We saw very high jumps in rates being approved,” she said. “When we saw that happening, that's when we stepped in and said no. This is not the time to be doing that.”
Notley criticized the United Conservative Party for giving insurance companies the go-ahead to raise prices in an already-expensive market, especially after spending the pre-election period opposing the NDP’s carbon tax. “This is a clear decision to help out his corporate insiders donors at the expense of regular working Albertans across the province.”
Celyeste Power, vice president, Western Canada for the Insurance Bureau of Canada, countered Notley’s suggestion that the AIRB had been disproportionately approving rate hikes before the cap went into effect, saying that panelists had expertise and asked applicants a lot of questions.
"I certainly don't think we're going to see anything like a free-for-all," she said.