Auto insurance costs in Alberta could rise by 87.6% by 2033

Auto insurance costs in Alberta could rise by 87.6% by 2033 – report | Insurance Business Canada

Motor & Fleet

Auto insurance costs in Alberta could rise by 87.6% by 2033 – report

IBC calls for immediate removal of rate cap

Motor & Fleet

By
Terry Gangcuangco

A new MNP report commissioned by the Insurance Bureau of Canada (IBC) warns that Alberta’s auto insurance rate cap could lead to substantial increases in driver premiums over the next decade.

The professional services firm’s analysis highlights that, without significant changes, premiums could rise by as much as 87.6% by 2033, as the cap exacerbates cost pressures in the province’s auto insurance system.

“It must be removed immediately before it causes any further damage.”

Sutherland emphasized that real reforms targeting cost drivers are needed to address the affordability issue, adding that insurers are prepared to collaborate with the government to find solutions.

The report suggests that Alberta drivers are struggling to secure adequate coverage due to the cap, which forces many to purchase more expensive policies from other insurers.

MNP’s findings indicate that if the rate cap remains, claims costs will push premiums to unsustainable levels. For motorists qualifying as “good drivers,” premiums are projected to rise by 43.8%, while those outside this category could face increases of up to 148.2% over the next 10 years.

Aside from detailing the negative consequences of the current regulation, the report also sheds light on the broader cost pressures straining Alberta’s auto insurance system, all of which are escalating faster than the government’s 3.7% rate cap.

It was found that since 2022, legal expenses tied to claims have surged by 19%; costs for medical care and recovery for injured drivers are up 27%; replacement vehicle prices have risen by 27% for new vehicles and 9% for used ones; auto theft-related costs have increased by 55%; and the government’s health levy on auto insurers has soared by 60%.

In the interim, Alberta’s insurers have proposed a series of reforms aimed at bringing the costs down.

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