New Report Leads to Questions About Auto Insurance Rate Changes

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 As insurance premiums continue to spike for Alberta drivers, Fair Alberta Injury Regulations (FAIR Alberta) has released a new report that refutes key claims from the insurance industry, and calls into question some of the increased rates that Albertans are now paying. 

For several months, the insurance industry has claimed that the Alberta auto insurance market is in crisis, depriving consumers of affordable and available auto insurance. The industry cites bodily injury claims costs that “continue to skyrocket” for Albertans who are victims of car accidents, suggesting injured Albertans are responsible. But the report compiled by Craig A. Allen, a Canadian actuary based in New York, and released by FAIR Alberta, finds that bodily injury claims costs are not skyrocketing. To the contrary, they have stabilized for the last three years, and even declined in the last year. 

The report reviewed data released by the Alberta Auto Insurance Rate Board (AIRB) and industry statistics from the General Insurance Statistical Agency (GISA). The report’s findings indicate that the AIRB, which approves auto insurance rate increases in Alberta, overestimated the severity of bodily injury claims reported in its 2018 annual report, and has since revised those costs to lower amounts. “Allowable rate levels since 2017,” writes Allen in the report, “provide more than adequate amounts for the estimated bodily injury claims costs that have subsequently emerged. For insurers that have kept up to date in their rate changes, further rate increases for bodily injury coverage appear to be unnecessary, at present and for a period into the future.” 

FAIR Alberta has long been skeptical of industry claims that payouts for injuries have created a crisis and is the cause of increased premiums. FAIR believes that insurers are looking to change consumer protection laws around injury compensation so that the industry can pay out less to Albertans who get hurt, and make more profit. The result being Albertans pay more in premiums but receive less insurance protection. Mark Feehan, spokesperson for FAIR Alberta, says the new report calls into question why Albertans are being stuck with rising insurance rates at all. 

“All this time, insurance companies have been blaming Albertans who have been injured in accidents for rising premiums. But now we have data that says that’s not true,” says Feehan. “This report raises a lot of questions,” says Feehan. “We now know injuries aren’t driving insurance rates. We also know many insurers in Alberta are still making tens of millions in profit each year. Consumers deserve answers to these questions. We should know if we all are being asked to bailout insurance companies who have simply made bad bets or made some poor business decisions.” 

You can find the report here.

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