IBC calls for overhaul of Alberta's grid rating system

IBC calls for overhaul of Alberta’s grid rating system | Insurance Business Canada

Motor & Fleet

IBC calls for overhaul of Alberta’s grid rating system

“It is clear that the grid no longer meets its original purpose”

Motor & Fleet

By
Terry Gangcuangco

The Insurance Bureau of Canada (IBC) wants the immediate overhaul of Alberta’s “outdated” grid rating system, which a Deloitte study found is essentially granting some of the worst drivers in the province an annual auto insurance subsidy.

“Alberta’s grid rating system is unique in Canada in that it caps the premiums of high-risk drivers,” the association noted in a release. “This means no matter how many at-fault collisions or infractions they have, high-risk drivers will never pay more than a set maximum amount.

“Because these drivers pay less than required for auto insurance, drivers with safe driving habits pay a higher premium to make up the difference.”

Deloitte’s IBC-commissioned study found that, on average, Alberta’s high-risk drivers with a history of at-fault claims and infractions receive an annual subsidy of $2,516; the worst ones with an extensive history of claims and infractions receive $9,859 in annual subsidy.

It was noted that safe drivers in Alberta pay $180 million annually ($65 per driver) in auto insurance premiums to subsidize the premiums of their high-risk counterparts.

“There is no public-policy rationale for subsidizing the premiums of high-risk drivers with a history of at-fault claims and/or infractions,” IBC Pacific and Western vice president Aaron Sutherland said. “This is unfair and works against the very thing the government should seek to encourage – safe driving.

“It is clear that the grid no longer meets its original purpose and places a significant strain on the affordability of auto insurance for good drivers. Given the province’s focus on improving affordability, IBC recommends the grid be removed – or substantially reformed – to strike a better balance for the majority of Albertans who drive safely.”

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