The Alberta government is promising changes to reduce high auto insurance premiums, including a cap tied to inflation for those with good driving records.
Finance Minister Nate Horner says that as of Jan. 1, drivers with good records cannot have their premiums increased by more than September’s inflation rate.
That rate was 3.7 per cent.
The announcement comes as the province moves to lift the freeze on auto insurance rate hikes at year’s end.
The freeze was imposed in January to help Alberta drivers paying among the highest premiums in Canada.
The province is also promising to give Alberta’s Automobile Insurance Rate Board more authority to offer ratepayers staggered bill payments and compel insurers to return a portion of payments in high-profit years.
“Achieving affordable auto insurance is a major commitment for our government and this is only the first step in delivering on that promise,” Horner said in a statement Wednesday.
“We value the sustainability of the insurance industry and call for increased collaboration from insurers as we continue the work to address these issues.”
The key change is tying rate hikes for good drivers to the rate of inflation.
Good drivers will be defined as those who have not had one or more at-fault accidents in the last six years or has not been convicted of a traffic infraction under the Criminal Code in the last four years. They must also not have had any major traffic convictions or more than one minor traffic conviction in the last three years.
The province said reduced driving during the COVID-19 pandemic spiked profits for insurers, exceeding the benchmark set by Alberta’s insurance regulator, and it’s eyeing changes to give the rate board more authority to take action.
The province is proposing recommendations to give the rate board the power to direct insurers to return a portion of premiums to drivers during high-profit years.
The rate board may also be granted the authority to request rate-filings from insurers then direct that rates be lowered.
The government is further promising to change regulations so that drivers have the option to pay their premiums in instalments rather than all at once.
As well, the province has commissioned a third-party report exploring long-term reforms to the system.
A draft report is expected by the end of the year and a final report in the spring.
This report by The Canadian Press was first published Nov. 1, 2023.
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