It’s an idea that should be squashed like a bug. Read More
”The data would tell us that it’s something we need to look at,” says Alberta budget boss Nate Horner, of lifting the cap on how much insurance companies can hike premiums on good drivers
“The data would tell us that it’s something we need to look at,” says Alberta budget boss Nate Horner, of lifting the cap on how much insurance companies can hike premiums on good drivers
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It’s an idea that should be squashed like a bug.
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Let me explain.
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Right now there is a rate cap for good drivers in Alberta.
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If you’re a good driver your auto insurance premiums cannot be hiked by more than 7.5 per cent in one year.
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Alberta already has the second-highest auto insurance premiums in Canada and is closing in on Ontario who have the highest. The other eight provinces are much cheaper.
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But insurance companies whine, well-connected conservatives are sometimes paid handsomely to whine to the Alberta government for them.
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To hear the insurance companies tell it, being in the insurance game is a thankless business where they pay out more than they take in and still the critics say they are a selfish lot who put the screws to us and often play hard ball with people when they are most vulnerable.
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The insurers speak of hard times, the many pressures they face — except when they report their earnings and trumpet their solid financial results, their strong bottom line.
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With these folks it is never good enough. They often threaten to leave Alberta if they don’t get their way.
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Do what we want — or else.
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Speaking with Nate Horner, Premier Danielle Smith’s budget boss and point man on insurance, it sounds like the man can feel some of their pain.
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“Its true we have put an artificial cap in place that’s not reflecting their actual costs at this time.”
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That’s the 7.5 percent yearly maximum premium increase for good drivers.
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Horner says we wouldn’t hear as much insurance company bellyaching if there was no rate cap. He adds premiums are “artificially low.”
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Horner also says the Smith government doesn’t have a plan right now to lift the cap but “it may be something we have to look at.”
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“No decision has been made to change it but the data would tell us that it’s something we probably need to look at.”
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Something they probably need to look at.
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Horner says if the government removed the rate cap this year, then down the line in 2027, when Alberta is overhauling the insurance system, we would see substantial savings on premiums.
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But he points out removing the rate cap would make the average Alberta auto insurance premium go up about $400 a year and Alberta would have the highest premiums in the country.
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“Premiums would likely be substantially higher without the good driver rate cap in place, and that’s causing issues across the system,” says Horner.
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The rate cap is causing the issues.
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The man riding herd on the insurance file says it’s not lost on anybody affordability was the reason Alberta’s insurance system is getting a makeover.
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But Horner is also concerned about the availability of insurance. He says insurers lost a lot of money in 2024.
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He says for every dollar they collect they cut a cheque for $1.20. He says for one company it was $1.30.
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“They’re going to limit their new offerings. Albertans are going to have a hard time finding someone to take them on or it will be on terms they don’t think are fair and agreeable.”
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To take off the rate cap or keep it on? That is the question.
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Give in to the insurance companies and fork out somewhere in the neighbourhood of $400 more with the promise of future savings in 2027 or …
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Call the insurance industry’s bluff and let the chips fall where they may.
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“I hope people appreciate we’ve made a choice that has made the system, frankly, more vulnerable,” says Horner, of keeping the rate cap for now.
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Meanwhile, when premiums rose, Premier Smith came out of the gate strong on this issue.
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There was talk of premiums even going down.
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Now the Alberta government finds itself in a game of political poker with the insurance crowd.
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There are no doubt some people in the government who are sick and tired of the insurance companies, who think a 7.5 per cent yearly increase to the premiums of good drivers is a big enough hike. Period. Full stop.
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As for the idea of paying higher premiums now for lower premiums in the future, who trusts insurance companies? Hands up.
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Then there’s the government’s Alberta Automobile Insurance Rate Board.
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If you are looking for them to have your back, dream on.
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Yes, many years ago they challenged the insurance companies. I was in the meetings back in the day headed up a guy by the name of Alf Savage who asked the tough questions.
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Now the rate board appears to be like the puppy who rolls over to get a belly rub from the insurance companies.
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I placed a call to them Friday, Naturally, they did not return the call.
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