As Canada’s auto insurers await path from the Alberta authorities on the province’s long-term reform options for auto insurance coverage, trade advocates have urged short-term choices to the auto product.
The Alberta authorities introduced final fall it will be retaining the auto rate cap for “good drivers” into 2024, together with additional regulatory intervention and premium cost plans. The brand new iteration of the speed cap has been in impact since Jan. 1, 2024.
In its announcement, the federal government outlined it had commissioned an exterior advisor to provide a draft report to investigate long-term reform choices.
The draft was expected by the end of 2023. But, a number of trade sources inform Canadian Underwriter the draft report has not but been acquired because the advisor wanted extra time. CU reached out to the exterior advisor for remark however didn’t hear again inside its publishing window.
Savannah Johannsen, spokesperson and press secretary to Alberta’s Ministry of Treasury Board and Finance, mentioned the federal government expects a closing report inside the first quarter of 2024.
“We’re contemplating all suggestions from Albertans and insurance coverage specialists,” Johannsen mentioned. “The insurance coverage fashions of different jurisdictions — each inside Canada and overseas are additionally being analyzed. The outcomes of the evaluation will assist inform the federal government’s choice in implementing sustainable, long-term options to deal with auto insurance coverage affordability in Alberta.”
In the meantime, Insurance coverage Bureau of Canada, an affiliation representing Canada’s dwelling, auto and enterprise insurers, says auto insurance coverage affordability within the province have to be urgently addressed.
“Premier Smith has been fairly away from her intention to introduce important reforms to Alberta’s auto insurance coverage market, and that’s a superb factor, nevertheless it’s possible a multi-year course of,” mentioned Aaron Sutherland, vp of IBC’s Western and Pacific areas. “We’re…encouraging authorities to maneuver urgently on these longer-term reforms they’re exploring.”
With that, IBC and The Canadian Federation of Impartial Enterprise (CFIB) final week known as on the Alberta authorities to axe two taxes charged on each auto insurance coverage coverage as a part of the 2024 provincial finances.
Mixed, eradicating these taxes would return approximately $100 annually to drivers on their coverage, IBC mentioned.
One of many taxes is the Insurance coverage Premium Tax (IPT), which quantities to a 4% cost to auto insurance policies. IBC says this quantity has grown by 28% since 2018, leading to over $1 billion in elevated prices to Alberta’s drivers
The second is a levy on auto insurance coverage, which is supposed to recuperate well being care prices. Nonetheless, IBC says this can generate $86.8 million this 12 months for the province.
“Now the trade will want time to regulate their programs to account for that,” Sutherland mentioned of the tax elimination. “This isn’t one thing that’s in a single day, however it’s definitely near-term and might be completed far more rapidly than a number of the longer-term product reform choices authorities is contemplating.”
These savings are on top of the $200 IBC outlined in its long-term reform proposal, Enhancing Care & Expanding Choice, from Spring 2023.
The P&C trade has strongly warned that an auto insurance coverage charge cap will put monetary pressure on auto insurers, who’re contending with value pressures from inflation and vehicle damage costs, bodily injury cost pressures, in addition to increasing incidents of theft.
On the time of publication, no further insurers have withdrawn from the Alberta auto market.
“Because the good driver value safety was instituted, we now have not acquired notices of withdrawal from any auto insurance coverage firms,” Johannsen mentioned. “Insurance coverage suppliers are required to present discover to the Superintendent of Insurance coverage in the event that they plan to both absolutely or partially withdraw their auto insurance coverage enterprise.”
Characteristic picture by iStock.com/Jinda Noipho
