The provincial government has lifted an insurance cap on auto insurance, meaning that it will become harder for road users to keep their cars on the road.
The N.D.P. introduced the cap in Aug. 2017 to stop insurance companies from overcharging consumers. However, it caused many problems for the industry, one of which being financial issues.
“Claims were getting higher. Those issues got worse within the system, and it made things a lot worse. Premiums were still increasing. Some people were seeing 20 to 30 per cent increases, even with the cap,” says Celeyste Power, the Vice-President of the Insurance Bureau of Canada – Western.
Premier Jason Kenney says that the cap restricted insurers’ ability to spend more on claims. This forced some insurance companies to pay out as much as 130% in premiums, and the rising insurances rates will be used to balance the figures.
Some insurance companies have already announced their new rates. Aviva and Desjardins Insurance will start their rates at 15 per cent. This figure is higher than Ontario and Newfoundland, who have hiked their rates to six and nine per cent, respectively.
The Insurance Bureau of Canada has asked consumers to research the best deals and ask questions regarding their auto insurance.
“There are 45 insurers offering auto insurance in Alberta. They will be looking at their customers in different ways. They are all in competition, so they want customers and the best options available for them,” Power says.
Insurance companies have advised drivers on some ways to save money. They recommend that road users cut collision coverage for older vehicles, as well as bundling home and car insurance. The final rate increase will be announced in January.
