November 21, 2003 by Canadian Underwriter
Introducing a new “premium grid” for auto insurance policyholders, the Alberta government says its reforms will lead to $250 million in savings for the province’s drivers.
According to the grid, a “benchmark premium” for drivers with clean records would be set, with a surcharge applied for at-fault claims or driving record blemishes. A discount would also be applied for the number of years of “clean driving”, and after ten years of clean driving, these drivers will be allowed an at-fault claim with no penalty.
This system will be used only for liability coverage, with insurers subject to a “file and use” system on collision and comprehensive lines of coverage.
The only rating categories insurers will be allowed to apply is geographic location and vehicle use, with underwriting based on age, marital status and other factors being banned. Accident benefits have been increased to $50,000 from $10,000. And, despite the imposition of a $4,000 cap on minor injury compensation for non-economic losses, no definition of minor injury has been offered yet. These “minor pains and strains” will be defined by “medical experts”, states a provincial government press release. An actuarial analysis to determine the rate grid will be done once this definition is set.
The government says it expects to have the new reforms in place by the spring, but will continue the freeze on rates put in place at the end of October until the new system is in place.
The reforms still have to pass through the legislature.