EDMONTON – Alberta’s insurance rate board says it will allow companies to hike automobile insurance rates by five per cent.
The rate hike, which applies only to the mandatory part of coverage, is effective November 1.
As a result of its annual public rate review, the Automobile Insurance Rate Board (AIRB) will permit premium levels for mandatory automobile insurance to increase by up to five per cent, effective November 1.
The Alberta government says insurance companies will have the option to implement all or part of the five per cent increase over the next three years.
The board says this is the first increase since 2008.
Both the insurance industry and the AIRB’s actuary agreed that a double digit percentage increase was warranted; citing a boost in bodily injury frequency and property damage collisions. The AIRB says these reasons, combined with a decrease in the revenue generated by investments made on premium income, were the key factors creating a need for an increase.
“We knew that an increase would be necessary, but we wanted to take a more measured approach in order to maintain balance in the system,” said Alfred Savage, AIRB chair.
“A five per cent increase, which works out on average to $30 per year, reflects current insurance trends while still keeping premiums at a reasonable level.”
Since 2004, the AIRB has reduced the mandatory portion of premiums by 18 per cent overall, and it will be closely monitoring the effects of this year’s increase.
The decision applies only to mandatory coverage, which
is required by law and includes third party liability and accident benefits
coverage. It does not include optional collision or comprehensive coverage.
Those premiums are set by individual insurance companies and monitored by the
board.
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