Will Alberta’s review of auto insurance result in greater transparency from insurance companies? It’s a worthwhile question because so far the industry’s cries of poverty and out-of-control costs have failed to be supported by existing data and evidence.
Take the question of profitability. Alberta has dozens of insurance companies operating in the province, some are homegrown while others are large multinational corporations. The industry has repeatedly said they have been forced to raise premiums on Albertans at eye-popping and budget-busting rates because they are losing money, but there is zero evidence and no transparency to support this. What we do know is that insurers across Canada reported a sector-wide profit of over $2 billion in 2018 and Alberta’s homegrown insurers, who must report their profits to government, continue to make healthy profits in the tens of millions from premiums. There certainly doesn’t look to be any crisis or any trouble for insurance companies with making a profit in Alberta.
Now let’s take the question about out-of-control costs for insurers. The insurance industry has claimed that the Alberta auto insurance market is in crisis, blaming everything from bodily injury claims to car repairs for rising costs, but data from the Alberta government shows claim costs for insurers in major areas to be declining since 2016. From the period of mid-2016 to mid-2019, in inflation-adjusted dollars, insurance payouts for injury claims decreased 2.0%, property damage claims decreased by 5.3%, and payouts for comprehensive coverage declined by 31.0%. Here again there is no evidence to support the insurance industry’s public talking points about why they keep jacking up their rates on Albertans.
Every Albertan and the Alberta government wants to see insurance rates become more affordable. So far the insurance industry idea to accomplish this is no-fault insurance. This scheme would put the insurance companies in charge of the whole system and would not allow for their decisions to be challenged in court. This would save insurers a bunch of money because they would be free to lowball consumers for their injury claim costs, payouts for totalled vehicles, and a whole host of other costs. Essentially the deal from insurers is, “let us save money by stripping away consumer protections and trust us, we’ll lower premiums.” That’s a raw deal for consumers to begin with, even if one were to trust the companies that they would drop their rates. There would appear to be a better, more balanced solution that could reduce premiums for Albertans and maintain a system of checks and balances between consumers and insurance companies. But for that to happen, we need more transparency from insurers. We know we can’t take them at their word so hopefully the government of Alberta’s review will demand more transparency on behalf of premium paying consumers in the province.