Insurers call for more flexible means of setting auto insurance rates

Canadian insurers are asking industry regulators to consider switching from a system of filing auto insurance rate changes and then waiting for regulatory approval to a more flexible system that would allow insurers to charge their proposed rate changes immediately upon filing them with the regulator.
I believe it is entirely realistic to have every jurisdiction in Canada move to a better and more responsive way of permitting insurers to change premiums to adapt to market developments, Mark Yakabuski, Insurance Bureau of Canada (IBC) president and CEO, told about 150 people attending his speech at the Economic Club in Toronto.
By 2011 at the latest, auto insurers everywhere [in Canada] should be allowed simply to file their modified rates and immediately put them to work in the marketplace for consumers.
Yakabuski noted some progress has been made in this area in Alberta.
For example, the province is planning to scrap its industry-wide adjustment of grid prices in its auto insurance product, according to Dennis Gartner, the assistant deputy minister of pensions, insurance and financial institutions of Alberta. The industry-wide rate adjustment applies to the provinces grid prices only, he noted.
In its place, Alberta is contemplating some kind of file-and-approve system, including some kind of benchmark to help insurers determine whether they must make simplified or full filings.
Gartner made his comments during his slide presentation at the IBCs regulatory affairs symposium in Toronto on Oct. 26.
At the same symposium, IBC vice president of policy development and chief economist Jane Voll suggested provincial governments should restrict their involvement to setting ceilings for auto rates beyond which regulatory action would be triggered. But by having to wait for regulators to approve any rate increases or decreases, the industry rates lag behind claims activity by between 20 and 24 months, she noted in a slide presentation.