Canadian Underwriter

Alberta election leaves IBC ‘cautiously hopeful’ on auto file

April 26, 2019   by Greg Meckbach

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Alberta brokers should touch base with the new provincial government and explain how auto insurance rules needs to change, suggests the Insurance Bureau of Canada’s CEO.

“Our campaign for change moves into a new phase with the recent election of the United Conservative Party,” IBC CEO Don Forgeron said during IBC’s annual general meeting Thursday. “Going forward, we will rely on (IBC member companies) their teams, brokers and other stakeholders to help us share the industry’s messages with the new government. There is much work to be done in Alberta and we are cautiously hopeful.”

As a result of the April 16 election, United Conservative leader Jason Kenney will replace New Democratic Party leader Rachel Notley as premier of Alberta. The UCP did not make any promises on auto insurance during the election.

The NDP left its mark on the industry with a 5% ceiling on auto rate increases. That rate cap applies across the insurer’s total book of business, so individual policyholders could see rate increases exceeding 5%.

Up until two years ago, the Automobile Insurance Rate Board restricted rate increases to a maximum of 10% a year. In 2017, Finance Minister Joe Ceci ordered AIRB not to approve rate increases of more than 5%. The restriction was initially in until Nov. 30, 2018, then extended to August, 2019.

“The situation is, frankly, dire,” Forgeron said of Alberta Thursday during the AGM in Toronto’s financial district.  “For every premium dollar, insurers pay out up to $1.29 in claims and operating costs.”

IBC is not calling for rate increases for all motorists, Celyeste Power, vice president of the western region for IBC, told Canadian Underwriter in 2018. Instead, IBC is looking for some steps to put cost pressures under control – such as allowing insurers who use telematics to impose surcharges on bad drivers.

The 5% ceiling affects brokers because Alberta has a “take-all-comers” rule for auto insurance, said George Hodgson, CEO of the Insurance Brokers Association of Alberta, in an earlier interview. A carrier cannot reject an insurance application but can cancel a broker’s contract because the business placed by that broker is not of the quality that the insurer wants, Hodgson explained.

IBC has been making the case for change in Alberta “with passion and with math,” Forgeron said Thursday. “We are already extremely well-positioned with the UCP and have met with many of the elected MLAs, the transition staff and premier elect Jason Kenney.”

Nearly every auto insurance system in Canada has serious challenges, Forgeron said. “Auto insurance systems are like justice, health care and education systems. They require constant review and adjustments.”


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2 Comments » for Alberta election leaves IBC ‘cautiously hopeful’ on auto file
  1. Peter Hope says:

    The telematics program was only allowed under the strict rules that it could only be used for discounting. Why would anyone sign up for a voluntary program if they could be surcharged?? Advocating for surcharging completely undermines the intention of the program and is proof that IBC is trying to manipulate government policy yet again.

    Ms. Power used to work in Harper’s PMO when Jason Kenney was a federal minister, and this is what they mean when IBC says it is “extremely well positioned with Jason Kenney and the UCP”. No kidding – they all used to work together! This is classic lobbying and there is zero interest in protecting the consumer. I hope Albertans push back against the back-door strategies of IBC.

    • Mackenzie says:

      Telematics with the potential to surcharge have been used already in British Columbia with some success. Consumers agree knowing there is potential for surcharge; many consumers believe they are good drivers and expect a discount. Those who gain a surcharge will switch to a company with out telematics or attempt to improve their driving habits, therefore benefiting the initial company and potentially reducing claims as a whole.

      If every provider in Alberta had this system, the results would be interesting to see. I am a believer in the surcharge system. It would be providing the most accurate rate. Years licensed, age, sex, and location are used to calculate premiums based off of generalizing the client, where as telematics provides the opportunity for clients to be assessed on how they /really/ are as a driver.

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