August 11, 2008 by Canadian Underwriter
The Automobile Insurance Rate Board (AIRB) has announced it is allowing a 5% increase in premiums for mandatory auto insurance in Alberta as a result of its annual insurance rate review.
As a result of the rate change, on average, Alberta drivers could pay an additional Cdn$30 per year for their mandatory insurance coverage.
The AIRB made its rate changes after public meetings held in June.
AIRB said its traditional public review of rates “became more complex this year after the court struck down the Minor Injury Regulation that placed a cap of [Cdn]$4,000 on non-pecuniary damages for some soft tissue injuries. This resulted in a change in the insurance product and increased costs to insurers.”
AIRB noted the Court of Queen’s Bench of Alberta decision in February 2008 has been appealed, “but without knowing the outcome, the AIRB has had to factor this uncertainty into its rate review.”
During the AIRB’s public consultations in June, actuaries and the Insurance Bureau of Canada argued premiums could justifiably be increased by as high as 29-36% to make up for the projected impact on claims of a lack of a cap on auto injury claims in the province.
The AIRB’s increase, effective Nov. 1, 2008, takes a number of factors into account, including total estimated claims and operating expenses for insurance companies.
“Alberta consumers continue to have access to fair and affordable auto insurance,” AIRB chair Alf Savage said in the release. “While the cost of mandatory coverage rises slightly to reflect increased costs for insurers, premiums are still 13% lower than they were prior to the auto insurance reforms implemented in 2004.”