Going against the advice its own actuary, Alberta has ordered an industry-wide auto insurance rate decrease of 5%.
The premium reduction takes effect Nov. 1, 2010.
The adjustment applies only to mandatory coverage, which is required by law and includes third party liability and accident benefits coverage.
"This reduction is primarily the result of a projected decline in the number of bodily injury claims in the province this coming year," AIRB chair Alfred Savage said in a press release. "The decrease will save Alberta drivers an average of $30 per year on their mandatory insurance premiums."
AIRB said its was based on input from Albertans, the board's consumer representative, the board's actuary, and insurers during an open meeting in June.
At that meeting, the board's actuary, Oliver Wyman, called for a flat rate adjustment.
In a statement, the Insurance Bureau of Canada (IBC) questioned whether the decrease will ultimately fulfill the board's objective of ensuring fairness to consumers by ensuring a healthy and competitive marketplace.
"It remains to be seen whether the AIRB's latest adjustment, which ignored the recommendations of its own actuary, will achieve that goal," Doug Noble, IBC's vice president of Alberta, said. "Rate-setting is a complicated, forward-looking process, so the impacts of this decision will only be known over time as new rates and future claims costs work their way through the system.
"In the meantime, Alberta's 73 auto insurers will continue to be competitive, both in meeting consumer needs and in operating their businesses."