Many Alberta drivers will soon pay more to insure their vehicles — in some cases, much more.
In a bulletin sent to brokers, and obtained by Global News, large home and auto insurer Aviva Canada said there would be across-the-board hikes of 15 per cent starting January 2020. It also confirmed to Global News that number could go up depending on driving and claims history.
The Insurance Bureau of Canada (IBC) said it doesn’t know exactly how many other insurers operating in Alberta have also applied for rate changes, but added there are a number of them.
LISTEN: Celyeste Power joins Danielle Smith to discuss the challenges to Alberta’s auto insurance industry
IBC’s Western vice president Celyeste Power said they have no choice, considering how claims have been increasing in the province.
“Insurers have actually been losing about 12 cents, on average, on every dollar that they’ve been taking in right now,” Power said. “So they’ve been paying $1.12 for every $1 they’re taking in.”
“So there’s actually no money grab here. They’ve been losing money for quite some time.”
For drivers like Scott Johnsen of Calgary, an insurance hike couldn’t come at a worst time.
“I’m already paying about 270 bucks a month for two vehicles,” Johnsen said.
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He moved to Calgary from Saskatchewan about three years ago and said he was paying about half as much there.
He added his only option may be to park one of his vehicles.
“It sucks,” he added. “Me and my wife both work, we have a small child, so we have to figure it out. Probably buy a bicycle.”
Aviva told Global News it filed for and received permission from Alberta’s rate regulator to increase rates for auto insurance following the UCP’s decision in late August not to renew the rate cap on auto insurance premiums.
In a statement the company said: “The five per cent rate cap imposed by the previous government may have seemed like a simple solution, but it simply delayed necessary increases to keep up with increasing costs.”
Aviva went on to say the cap did not address underlying issues that drive up premiums — things like higher car repair costs, more expensive injury claims and less choice in the marketplace.
IBC went even further.
“Unfortunately, that was just a band-aid,” Power said.
“None of the issues within the system were addressed in that four years. And now consumers like us, we’re paying for it.”
The Insurance Brokers Association of Alberta also said changes were necessary. Still, officials are bracing for some backlash from customers.
“It may be a hard pill to swallow for some people,” CEO George Hodgson said.
“We knew that the companies were in trouble in terms of profitability, so I guess it isn’t a huge surprise.”
Hodgson didn’t know if everyone would be facing a 15 to 20 per cent hike, but added this would be a perfect opportunity to shop around.
He suggested drivers ask their broker questions and review their coverage.
Both Hodgson and Power also said there could be new opportunities with the rate hikes.
In the past, some insurers cancelled plans or required premiums to be paid upfront, not in installments. Both hope that will now change.
Information on what other insurers will be hiking rates should be available in the coming months.
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