According to data from the General Insurance Statistical Agency (GISA), Alberta’s auto insurance system is facing some of the highest cost pressures in Canada.
The Insurance Bureau of Canada (IBC) stated in a release that legal costs now account for a greater portion of the auto insurance premiums drivers pay in Alberta than anywhere else in Canada.
"Costs from litigation and legal fees are twice as high as in Ontario, and over three times as in some Atlantic provinces. GISA data also shows that Alberta ranked second in Canada for the amount spent per claim to repair vehicles as well as the frequency at which vehicles are stolen."
IBC warned that if something isn't done, it is likely that Alberta's auto insurance premiums, already some of the highest in the country, will continue to climb. Aaron Sutherland, Vice-President, Pacific and Western of IBC said that Alberta’s insurers are keen to work urgently with the government to tackle the cost pressures.
“Unfortunately, the action taken to date – including Alberta’s rate cap for good drivers – does not address the costs underlying drivers’ coverage and will do little to improve the price drivers are paying moving forward.”
IBC broke down some of the key factors which are driving high insurance premiums in the province, which include lawsuits and legal costs associated with insurance claims among other things. Lawsuits and legal costs have soared 31 per centin Alberta since 2018 and now account for 20% of mandatory premiums.
"Bodily injury costs related to third-party liability (i.e., legal costs) will rise a projected 5 per cent in 2024, [while] accident benefit costs will rise a projected 11 per cent in 2024."
Other key factors include spending on vehicle parts and repairs, which was up 3.5 per cent in December 2023, while, over the last three years, these costs have risen 18 per cent in Alberta. Vehicle thefts, which are also on the rise in the province have increase 39 per cent.
IBC believes that there are solutions though, which could save drivers an average of $325 a year. Some of these cost-cutting measures include the IBC’s “Enhancing Care & Expanding Choice” proposal.
"[This] gives drivers more control over their coverage, while doubling the care provided to those injured in collisions. Best of all, it could save drivers, on average, up to $200 on the required premium."
Previously, IBC also called on the government to axe two taxes which are added to insurance policy premiums - the Insurance Premium Tax (IPT), as well as the healthcare levy.
In the fall throne speech which was delivered by Salma Lakhani, Lieutenant Governor of Alberta, insurance costs were enumerated with the speech stating that, 'insurance premiums are another cost-of-living pressure that this government must act on.'
Insurance affordability was also something Premier Smith mentioned in her mandate letter to Finance Minister, Nate Horner.
"As lead, working with the Minister of Affordability and Utilities and stakeholders to review and develop short and long-term recommendations to make automobile and property insurance more affordable for Albertans," Premier Smith wrote.
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