Samantha Kohn, Freelance Blogger
Right now, Alberta drivers pay some of the highest car insurance premiums in the country.
Changes are coming that will shape the future of auto insurance in Alberta. With an eye on fairness, affordability, and proactive regulation, the Alberta provincial government has set forth reforms that are both noteworthy and promising.
For anyone looking to secure the cheapest car insurance in Alberta, or simply wanting to understand the evolving landscape, we recommend you keep reading.
Key takeaways on Alberta auto insurance reforms
- As of January 2024, the Alberta government is implementing a cap on the increase of auto insurance premiums for 'good drivers' – if you meet the conditions to qualify, your insurer will only be able to increase your rate by a maximum of 3.7%.
- The government is also proposing more power to the Auto Insurance Rate Board (AIRB). If amended, the board will have the authority to direct insurers to return a portion of funds back to consumers from highly profitable years, along with the authority to request an insurer's rate filing at any time.
- Lastly, while most Albertans are already offered premium payment plan options (instead of being required to pay in full upfront), this practice will be adopted permanently – insurers will be required to offer options, providing consumers with the opportunity to budget accordingly.
Historical context: Alberta car insurance price caps and pauses
This isn’t the first time officials have moved to control car insurance premium increases in Alberta. Here's a brief overview of how insurance pricing has changed in the province over recent years:
The Alberta NDP came into power in 2017, and introduced a cap of 5% on insurance premium increases, ensuring that rates wouldn't skyrocket for the average driver. However, this policy was reversed when the party left office in 2019.
During the pandemic, more people were staying at home, meaning they drove less and were less likely to be involved in a crash. This led to insurers gaining higher-than-expected profits, surpassing the benchmark set out by the Alberta Auto Insurance Rate (AIRB). In fact, Alberta insurance providers increased their profits by $150 million from 2019-2020.
Price increases on everything from fuel to groceries to rent and mortgage payments are making it more and more difficult for all Canadians to build and maintain a comfortable standard of living.
In an effort to help manage this cost-of-living crisis, in January 2023 the Alberta UCP agreed to freeze all rate increases for the remainder of the year. This relief is scheduled to end in January 2024. Not to worry – new financial relief is coming into effect at the same time as the previous program ends.
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Changes to expect for Alberta car insurance
There are three main changes to Alberta car insurance coming into effect in January 2024 – these are:
- Rate increase caps for good drivers;
- Amendments for the Automobile Insurance Rate Board;
- Premium payment plan options to help more Albertans.
Caps on price increased for good drivers
Alberta car insurance is just one of many expenses that drivers need to worry about, but limited price increases are one way the provincial government can help make life more affordable for Albertans.
As of January 1, 2024, Alberta drivers with good driving records will enjoy a cap on car insurance premium increases, meaning the cost of their insurance cannot be increased more than 3.7%, which is equivalent to the September 2023 inflation rate.
To be considered a ‘good driver’ under this amendment, a driver must not have experienced:
- Accidents in the last six years in which they were at fault;
- Criminal code traffic convictions in the last four years;
- Major traffic convictions in the last three years; or
- Two or more minor traffic convictions in the last three years.
While there is currently no set cap for drivers with a not-so-stellar record, the AIRB will maintain stringent oversight, ensuring that premium hikes are both fair and justified.
This measure has been criticized by the Alberta NDP party, which sees the definition of a ‘good driver’ as too narrow.
Whether you are considered a good or bad driver, the AIRB made sure to put forward a familiar message, recommending drivers do their research and shop around. Comparing car insurance quotes from different auto insurers is one of the best ways you can uncover savings.
Amendments to the Auto Insurance Rate Board (AIRB)
There are also proposed amendments to give the AIRB more power and control over insurance premiums. If amended, they will soon be able to mandate insurers to refund premiums in highly profitable years, and they will also be able to prompt insurers for a rate assessment whenever needed, potentially leading to rate reductions.
Alberta car insurance premium payment plan options
Alberta car insurance providers will no longer be able to require their customers to pay for their annual premiums all at once. All insurers in the province will be required to offer premium payment options, allowing Albertans to budget and plan their expenses accordingly.
A possible no-fault system and public insurance
A cap on auto insurance premium updates may not be the only change in store for Alberta drivers in 2024. The government is also considering a no-fault auto insurance system similar to how Ontario car insurance works or even possibly creating a public insurance Crown corporation like the ones that currently exist in Saskatchewan and British Columbia.
The bottom line
The Alberta car insurance landscape is undergoing pivotal changes. With a renewed emphasis on fairness, accessibility, and proactive governance, drivers across the province have every reason to be optimistic about the road ahead.
Whether you're cruising the streets of Calgary, commuting in Edmonton, or journeying through rural Alberta, these reforms impact every Albertan driver.
The province's push for fairness and affordability might mean that those looking for economical auto insurance in Edmonton, Calgary and the rest of the province will have more choices at their disposal.