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NDP calls for one-year freeze on auto insurance rates in Alberta

However, the Alberta Auto Insurance Rates Board says rates have not only plateaued recently, they are trending down

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Alberta NDP Leader Rachel Notley is calling for a one-year freeze on auto insurance rate premiums, citing massive profits by companies while inflation hits 30-year highs.

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Speaking at a Friday press conference, the Opposition leader pointed to the Superintendent of Insurance’s 2020 Annual Report, which said the car insurance industry charged Alberta drivers $385 million more in premiums in 2020 than in 2019, extrapolating the total to $1.3 billion over the course of the last three years. The Superintendent of Insurance did not put out a report for 2021 and will not for 2022.

“We estimate this freeze that we are proposing will save motorists $360 million,” said Notley. “This doesn’t offset all of the cap costs from rising inflation but I would say it’s a good start and it gives some predictability to Albertans who are in desperate need of that.”

Premiums did spike in 2020 after the province let the NDP cap of five per cent on base premiums expire in 2019.

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However, the Alberta Auto Insurance Rates Board — a non-partisan review board that looks at requests for rate increases — said the increase was temporary and not as high as the 10 to 30 per cent Notley is claiming. Further, the rates have not only plateaued recently, they are trending down.

Laurie Balfour, the executive director of the AIRB, told Postmedia on Friday rates jumped on average by 7.6 per cent in 2020. However, she said despite the cap in place, rates jumped 6.9 per cent in 2019 and insurance was less accessible for additional coverage like collision depending on driving records and locations. Following that spike in 2020, rates have dropped. In December 2021, the rolling three-month average was a decrease of 3.2 per cent, Balfour said, and rates are trending down over the last 12 months by 0.83 per cent.

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“The Alberta rate board has been very cognizant of the impact to consumers, we are definitely concerned with the affordability as well as the availability with insurance,” she said. “That is really a balancing act.”

This does not mean no Albertans will see an increase in their rates, as many factors are taken into consideration.

Decisions on rate applications are vetted and go through actuaries and processes to ensure companies are factual in their claims.

Further, she said the profitability of insurance companies has been overstated as the numbers do not take into account many other fiscal factors like increasing prices on overhead, financing, salaries, brokerage fees and supply chain factors when it comes to the auto industry insurance companies must take into consideration.

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“What we saw reported as actual data reported through the General Insurance Statistical Agency the last year was a much different picture than what we saw reported by the NDP in terms of profitability figures,” she said.

All told, the entire auto insurance industry in Alberta in 2020 made an after-tax profit of $167 million — including $32.4 million on private passenger vehicles. She said there was an underwriting loss but they made their money on investment income.

She said added rates do vary from company to company and recommends consumers shop around for the best deal, even going straight to companies and going around a broker if they need to be. Balfour said most companies are taking a wait-and-see approach into the summer for what happens with the pandemic and other global pressures.

On a whole, according to 2020 data, Balfour said Alberta had the third-highest insurance rates in the country, behind Ontario and BC, but on an income level and affordability scale, Alberta drivers were middle of the pack.

jaldrich@postmedia.com

Twitter: @JoshAldrich03

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