As we covered in last month’s blog, the 5% rate increase cap imposed by the previous government has now expired. Currently, the Alberta government is exploring the possibility of reforming the province’s auto insurance industry. While there’ll be a rate hike, it’s important to know that there might be bigger changes coming. Here’s what you should know.
Cap & Consequences
The previous provincial government originally introduced the 5% rate increase cap as a measure to help Albertans afford coverage. This was a response to families struggling financially and the perception that the Automobile Insurance Rate Board had been approving too many rate increase requests from insurers.
According to Finance Minister Travis Toews, the cap was little more than a Band-Aid and ended up hurting Albertans more than it helped them. Many of them struggled to find affordable coverage that also met their insurance needs. This happened because the cost of insurance claims has been rising in past years.
More Claims, Less Choice
The Insurance Board of Canada reports losses of nearly $2 billion in the industry over the last 5 years. Because of the previous rate increase cap, they were unable to keep up with the rising costs of claims. Unpredictable weather and climate change has caused more accidents and cars are also more expensive. Insurers couldn’t increase their rates as much as they needed to. To offset their financial losses, they offered fewer non-mandatory coverage options. Thus, the cap resulted in lack of choice for consumers.
Teaming Up with a Broker Can Help
Now that the 5% rate increase cap has expired, consumers should expect their premiums to go up by 10 to 30%, depending on the company. However, while a rate hike may be unavoidable, the government has said that they’ll work to ensure that auto insurance is affordable for everyone in Alberta. Consequently, they’ve put together a committee to explore how the industry might be reformed.
One unfortunate consequence of the rate hike cap was that many insurers had cancelled contracts with brokers, meaning they had access to fewer policies. With the cap lifted, these contracts can be renewed. Since insurance brokers strive to find the best coverage for their clients, the renewal of these contracts is good news for consumers!
Trusted Insurance Brokers in Edmonton
Finding the right coverage can be difficult, but insurance brokers work for you, not for the insurance companies. At MBS Insurance Brokers Ltd., we can help you navigate the upcoming changes to Alberta’s insurance landscape. Contact us today to make an appointment or to learn more about the policies we carry and find the right fit today.