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Alberta Automobile Insurance Rate Board (AIRB) permits premium increase of up to 5%


July 26, 2012   by Canadian Underwriter


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Alberta’s Automobile Insurance Rate Board (AIRB) is permitting premium levels for mandatory automobile insurance in the province to increase by as much as 5%, effective Nov. 1.

As part of the competitive process, insurance companies have the option to implement all or part of the 5% increase over the next three years.

Both the insurance industry and the AIRB’s actuary, Oliver Wyman, agreed that a double-digit percentage increase was warranted, citing a boost in bodily injury (BI) frequency and property damage collisions.

Oliver Wyman recommended an industry-wide rate adjustment of 11.5% for 2012, whereas the Insurance Bureau of Canada (IBC) recommended a 13.1% rate adjustment.

AIRB reported that increases in BI frequency and property damage collisions, combined with a decrease in the revenue generated by investments made on premium income, were the key factors creating a need for an increase.

“We knew that an increase would be necessary, but we wanted to take a more measured approach in order to maintain balance in the system,” said AIRB chair Alfred Savage. “A 5% increase, which works out on average to $30 per year, reflects current insurance trends while still keeping premiums at a reasonable level.”

The AIRB has reduced the mandatory portion of premiums by 18% since 2004. This is the first increase since 2008.

The decision applies only to mandatory coverage, which is required by law and includes third-party liability and accident benefits coverage. It does not include optional collision or comprehensive coverage. Those premiums are set by individual insurance companies and monitored by the AIRB.


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