September 27, 2004 by Canadian Underwriter
Calgary-based Canada Brokerlink Inc. has set up a website to speak out about the new Alberta auto insurance system. The site, www.albertaautoinsurance.ca, is a response to what Canada Brokerlink president Jon Ouellete says is an “extremely political and not very accurate” $1.2 million advertising campaign by the provincial government, which purports to explain the new system to consumers.
Ouelette says the government “has no idea on what are the long-term effects” of the new system for Alberta’s drivers. “Talk of the insurance grid not only confuses drivers, but does not apply to 95% of drivers, only the 5% who are at risk.”
On the site, the broker notes that while all Alberta drivers are entitled to the immediate 5% rate rollback, this applies only to the third part liability and accident benefits portions of the policy. As well, companies have until January 31, 2005 to process all of the rebates, although they will be back-dated to October 1.
Ouelette notes that the new system, where rating is based solely on driving experience will result in other drivers subsidizing younger drivers and other higher risk drivers. “Unfortunately, the changes made and current rate freeze are akin to putting a bandage on a badly infected wound,” he writes in an open letter posted on the site. “When the bandage is removed the infection will still be there. In this case, claim costs will continue to escalate while premiums are artificially held down by an 18-month rate freeze.”
He expects another round of auto reforms once the freeze ends and the claims costs expected do not in fact materialize.