Alberta is looking to corral the bucking bronco that is its auto insurance system.
Driving the news: Alberta is expected to repeal its 3.7% cap on premium increases for designated good drivers. The idea is that nixing the cap will actually result in lower premiums in the long term as it lets insurers keep up with rising costs, which will stoke competition.
- The province’s insurance superintendent estimates a third of insurers lost money on Alberta auto insurance last year, with three insurers recently leaving due to high operating costs.
- One report found that by reducing competition and punishing “non-good” drivers, the cap will cause premiums to rise 87.6% between 2023 and 2033, compared to 36.9% without it.
Big picture: This is part of a suite of reforms, including moving from a tort insurance system to a largely “no-fault” one. This would remove the right of accident victims to sue at-fault drivers under many circumstances, with payouts coming almost exclusively from insurers.
- A pair of reports found a no-fault system could cut premiums by ~20%, though critics (and ambulance chasers) feel it will leave victims with inadequate compensation.
Why it matters: This could mark the end of the tort system in Canada. After B.C. switched to no-fault in 2021, Alberta was the only default tort system left, per Square One Insurance.—QH