Full speed ahead? Alberta fast-tracking auto insurance reform
Whatever auto reforms come of the Alberta Government’s push to lower auto premiums in the province, one thing is for sure — they’re acting fast.
The industry can expect to see changes to the Insurance Act as early as fall 2024 — with even more on the way — two Alberta regulators said during a “Talk with Regulators” session at the Insurance Brokers Association of Alberta Convention 2024 in Banff.
“I find that governments tend to work at two speeds: glacial or lightspeed. And this is closer to lightspeed,” said David Sorenson, deputy superintendent of insurance for the Government of Alberta.
“I would say that there’s definitely intent and there’s momentum to get it done this fall.”
The United Conservative Party government has not declared its official decision on long-term auto insurance reform. Currently, it’s mulling over its recently-commissioned actuarial report by Oliver Wyman, which concludes that a B.C.- or Manitoba-style public auto insurance system would generate the most significant premium savings for Alberta drivers.
The report has been vigorously contested by private auto insurers, who’ve critiqued its methodology, as well as the feasibility of implementing a public auto regime.
But while the UCP parses out its long-term reform options, insurers are contending with a 3.7% rate cap increase on provincial auto policies for “good drivers.” Nearly 75% of drivers qualify as “good” under the current rate cap, according to Alberta Automobile Insurance Rate Board data, said executive director Laurie Balfour.
“The end goal — and we’ve got to keep in mind that these are our elected officials in Alberta making these decisions — the department hopes to introduce enabling amendments to the Insurance Act in the fall,” said Sorenson, though he noted it’s subject to direction and policy approval by elected officials.
Then come amendments to regulations, which are projected to be introduced in Spring 2025.
“Then, [government will] implement over a period of 18 to 24 months,” he said.
If the province keeps to its timelines, it aims to go live with its auto insurance reform in 2026 or 2027 — just in time for the next provincial election.
The next provincial election is currently scheduled for May 31, 2027. However, the government yesterday introduced legislation that will move the date from May to October, citing springtime natural disasters as the reason for change.
“We all know that significant change is not going to be implemented quickly. Many insurance companies will tell us it takes us at least a year to really retool and turn the ship,” said Sorenson.
As for how these amendments will get developed, Sorenson said the government is holding a summit on May 27 to hear from industry stakeholders with their thoughts on reform options.
“This is not government coming up with the solution by themselves,” said Sorenson. “What we need to hear from insurers is, what tools do you need [from] government to support and help you? […]”
Feature image by iStock.com/Mostofa Siraj Mohiuddin
