UCP to end cap on auto insurance rates

The Alberta government has decided not to renew a fiveper-cent cap on increases to automobile insurance rates, allowing the Ndp-created regulation to expire last Saturday.

An independent regulatory body will now be responsible for approving any insurance rate hikes, a government spokeswoman said.

“Our government will allow the Automobile Insurance Rate Board (AIRB) to fulfil its mandate in setting auto insurance rates,” Charlotte Taillon, the acting press secretary for Alberta Treasury Board and Finance, said in an emailed statement.

“We believe this independent board is best positioned to evaluate the health of the insurance market and we respect their expertise and experience in the field.”

The cap was first implemented in 2017 as a ministerial order from thenndp finance minister Joe Ceci. The cap required auto insurance companies to limit their cumulative rate increases to five per cent, but rate hikes for individual insurance premiums were permitted to rise by more than that value.

In an interview Saturday, Edmonton-glenora NDP MLA Sarah Hoffman said the cap was introduced to prevent massive proposed increases to drivers’ insurance rates.

“Some companies told us that they were planning on increasing insurance rates by 20 per cent. We didn’t support that,” Hoffman said. “That’s why we brought in the five-per-cent cap.”

The UCP argues that the cap had a negative effect on consumers, who they say were subject to an unfriendly market because of the cap’s impact on insurer’s profits.

“Albertans also faced new requirements to pay for a full year of premiums up front, had reduced access to collision or comprehensive coverage and saw new administrative barriers to renewing or applying for insurance, as insurers took steps to minimize their losses,” Taillon said.

Insurance industry workers were heavily critical of the cap after it was introduced, with George Hodgson of the Insurance Brokers Association of Alberta characterizing the situation to Postmedia as a “crisis” due to the rising cost of claims exceeding the permitted rate increase.

But Hoffman said that the Kenney government’s choice not to renew the cap is another example of the province doing a favour for big business.

“(The UCP) have been making decisions ever since they were elected to put major corporations ahead of ordinary families,” she said.

Hoffman added that she doesn’t trust the AIRB to appropriately regulate companies’ requests to increase their rates.