Alberta’s NDP renewed its call to reinstate a cap on auto insurance premium hikes on Wednesday, citing new numbers they say show the industry is not struggling in the province.
The latest version of an annual report that takes a broad look at Alberta’s insurance industry shows auto insurance companies collected a little over $5.428 billion in premiums in 2019 while paying out a little over $4.276 billion in claims.
The $1.15-billion difference in favour of the insurance companies is an increase from the $974 reported in 2018, the NDP said.
At a news conference, Opposition Service Alberta Critic Jon Carson said the Superintendent of Insurance 2019 Annual Report suggests the auto insurance sector remains more profitable than some in the industry have indicated.
“(This report) debunks all of the UCP claims and raises serious questions about who this UCP government is really working for,” Carson said. “They claimed the rate cap would make the companies unprofitable.
“The UCP removed the cap, allowing insurance companies to increase the premiums as much as they wanted. As a result, we saw insurance premiums skyrocket. In fact there was a 24 per cent increase to rates in 2020 alone.”
Last December, Finance Minister Travis Toews said the cap brought in by the previous NDP government “had insurers getting squeezed” and resulted in Albertans finding themselves with “fewer and fewer insurance options.”
READ MORE: Alberta strikes panel to review auto insurance, won’t bring back rate cap
In August 2019, the cap was not renewed under the UCP government. A report by the Automobile Insurance Rate Board earlier this year found that 27 insurers operating in Alberta were granted rate hikes ranging from less than one per cent to almost 30 per cent for basic coverage on private passenger vehicles. However, the board also noted it expects the elimination of the cap to benefit not just insurers, but also drivers who were having difficulty getting the coverage they needed under the old rate cap.
READ MORE: Alberta government won’t keep cap on auto insurance rate increases
“Following nearly two years of rate restriction, some Albertans found it difficult to obtain the coverage they required or access to payment plans,” the board said in January.
“These actions by insurers were directly related to their inability to receive approval for rates commensurate with the risk.”
Opposition Finance Critic Shannon Phillips said Wednesday that the numbers in the new report speak for themselves, even if the gap between premiums collected and claims paid out is “not all profit.”
“There are some administrative costs that need to be paid and we understand that,” she said. “(But) rates have gone up 24 per cent at a time when Albertans are driving less.”
READ MORE: Alberta drivers are facing high insurance costs, according to new numbers
Phillips said she doesn’t understand the rate increases that she says send money to corporations based outside of Alberta at a time when many in the province are driving less because they either work from home because of the COVID-19 pandemic, or have lost their jobs.
“It makes you wonder who the UCP are working for,” she said.
On Thursday afternoon, Global News received a response to the NDP’s claims from the finance minister’s office, which said the Opposition “has taken a narrow focus on a much larger issue.”
“The claims ratios included in the report represent claims-related expenses only, and do not include other expenses such as commissions, premium taxes and administrative costs,” reads part of a statement from press secretary Jerrica Goodwin. “Automobile insurance premiums has been a topic of frustration in Alberta for nearly 10 years. That’s why Alberta’s government passed legislation with immediate measures to make insurance affordable for Alberta drivers.
“At the same time, the changes will increase coverage for diagnostic and treatment services, and enhance benefits included in mandatory auto insurance. Our government is ensuring a more sustainable and affordable automobile insurance system for Albertans. Our priority is Alberta drivers, not insurance companies.”
Phillips also noted that some years are more difficult for the auto insurance sector than others, citing the number of claims that were paid out because of the Fort McMurray wildfire in 2016. But she said in the big picture, the numbers suggests the industry’s profit margins have been increasing ever since.
An executive with the Insurance Bureau of Canada, an organization representing insurers, said “the data the NDP have used to make this suggestion simply doesn’t hold water.”
“Worse, its misleading as they’ve excluded costs for taxes, commissions and operating costs,” Aaron Sutherland said in an email to Global News.
Sutherland cited numbers released by the Automobile Insurance Rate Board this fall and said when factoring in other expenses, the report shows insurers paid out 105 per cent of premiums in 2019.
“Clearly, the industry wasn’t profitable and has actually lost money,” he said. “This is a key reason for the challenges facing consumers and the industry in recent years, and why Bill 41 was so important to helping stabilizing things and improving affordability for drivers.”
Both Phillips and Carson called on the government to immediately freeze increases on premiums and to reinstate a cap on how much insurance premiums can rise once the pandemic is over.
READ MORE: Panel recommends no-fault auto insurance to address rising, costly premiums for Albertans
“While in government, we heard countless stories of Albertans being faced with drastic increases to their auto insurance with apparently no reason,” Carson said. “Premiums were going up across the industry which puts drivers in an impossible spot. They were forced to either pay the higher cost or quit driving altogether.
“So we listened to Albertans while in government and brought in a five per cent cap on increases to auto insurance premiums. We thought this was a reasonable measure that would protect drivers.”
–With files from The Canadian Press’ Dean Bennett
Watch below: Some Global News videos about auto insurance in Alberta.
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