by Heather Cournoyer | Feb 26, 2025 | Auto Insurance, Government, Industry News
Alberta’s automobile insurance premiums have been a rollercoaster ride over the past few years and the premiums keep going up. From rate caps to new rules, and even plans for a no-fault system, drivers and insurers have faced many changes. This article will take you through the key events and explain why these changes matter.
1. NDP Government Rate Cap – November 2017
The NDP government implemented a rate cap that limited annual auto insurance premium increases to 5%. This cap was intended to protect consumers from steep rate hikes. However, insurers argued that it led to financial strain as they couldn’t keep up with rising claims costs, resulting in some insurers paying out more in claims than they collected in premiums.
Following the leadership change in 2019, the UCP government did not renew the rate cap, allowing insurers to adjust premiums without the 5% annual limit that had been in place from 2017.
2. Direct Compensation for Property Damage (DCPD) – January 2022
Alberta introduced the Direct Compensation for Property Damage (DCPD) system. Under DCPD, if you are not at fault in a collision, your own insurance company will cover the damage to your vehicle without impacting your driving record. This change aimed to streamline the claims process, reduce administrative costs, and align premiums more closely with repair costs.
3. UCP Rate Pause – January 2023
The UCP government announced a freeze on new rate approvals for private passenger auto insurance premiums until the end of 2023. This decision was made to address concerns about the rising cost of living and inflation.
4. Rate Cap Adjustment – January 2024
The UCP government introduced a new rate cap allowing insurers to increase premiums by up to 3.7% for drivers classified as “good drivers”. This adjustment aimed to balance affordability for consumers with the financial needs of insurers.
Continued Financial Pressures: Despite the rate cap, insurers continued to face financial pressures due to rising claims costs, increased vehicle repair expenses, and extraordinary events like the 2024 Jasper wildfire and Calgary hailstorm which totaled over $4 billion in insured losses.
5. Current System – January 2025
Rate Cap Adjustments: The rate cap for good drivers has been adjusted to a combined 7.5%. This includes a 5% cap on general rate increases and an additional 2.5% to cover natural disaster-related costs.
The rate cap aims to balance the need for affordable premiums with the financial viability of insurers, who have faced rising costs due to legal claims, repairs, and natural disasters.
6. Proposed Shift to No-Fault Auto Insurance – 2027
The Alberta government has announced plans to transition to a no-fault auto insurance system by January 2027. Under this system, each driver’s insurance policy will cover their own damages and medical expenses, regardless of who is at fault.
This change aims to reduce costs and streamline the claims process, but it has faced criticism for potentially limiting the rights of injured parties to seek fair compensation. The no-fault system will prevent collision victims from suing other drivers or their insurers, except in cases of catastrophic injuries or criminal offenses.
The government has indicated that if these measures do not sufficiently lower costs for consumers, they may consider a public auto insurance option as a last resort.
Who are the key stakeholders?
1. Consumers
Claims and Repair Costs: Consumers’ claims for vehicle repairs, medical expenses, and other damages have steadily increased. Factors such as advanced vehicle technology and higher repair costs have driven up premiums.
Natural Disasters: Events like the 2024 Jasper wildfire and Calgary hailstorm have led to a surge in claims, further increasing premiums.
Driving Behavior: Factors such as traffic violations, and risky driving habits now have a significant impact on insurance premiums. That can affect the coverage options available to you.
2. Auto Insurers
Financial Viability: Insurers have faced financial pressures due to the rate caps and freezes imposed by the government. These measures restricted premium adjustments, causing financial strain.
Market Competition: Rate caps and freezes have affected market competition. Some insurers have exited the province or reduced overage options in Alberta. This has impacted the overall availability and pricing of insurance.
Administrative Costs: Insurers have incurred higher administrative costs due to the complex claims process and regulatory requirements. The 2022 DCPD system aimed to streamline processes but brought significant costs.
3. Personal Injury Lawyers
Litigation Costs: Personal injury lawyers have significantly impacted premium costs by driving up litigation expenses and judgements. Under the current at-fault system, injured parties often sue for compensation,. This leads to higher legal fees and settlements.
Claims Frequency and Severity: The presence of personal injury lawyers can increase the frequency and severity of claims, as they work to maximize settlements for their clients. This has contributed to rising costs for insurers.
4. Alberta Government
Policy Decisions: The Alberta government has played a crucial role in shaping the auto insurance market through various policy decisions. These include implementing and adjusting rate caps, introducing the Direct Compensation for Property Damage (DCPD) system, and proposing a shift to a no-fault insurance system.
Rate Caps and Freezes: The government’s decisions to impose rate caps and freezes have aimed to protect consumers from steep premium increases. However, these measures have also led to financial strain for insurers, limiting their ability to adjust premiums in line with rising claims costs.
Market Stability: The government’s interventions have impacted market stability, with some insurers reducing their presence or coverage options in Alberta. This has affected competition and the overall availability of insurance.
Summary: Alberta’s auto insurance landscape has seen constant change, with rate caps, new systems, and ongoing government intervention shaping the market. While the latest adjustments aim to balance affordability and insurer sustainability, the long-term impact remains uncertain. With a shift to no-fault insurance on the horizon, the future of auto coverage in Alberta is still unfolding. Only time will tell how these reforms will affect drivers, insurers, and the industry as a whole.
by Heather Cournoyer | Oct 24, 2024 | Broker Advantage, Claims, Cool Stuff, Government
The other day, I was chatting with some people about their insurance, and some of their challenges got me thinking. Many of us don’t always know what questions to ask about our coverage, and sometimes, we assume we’re covered for everything—until something happens and we find out otherwise.
One person asked, “What happens if you have a problem and your agent can’t help you?” It’s a great question. If an agent sells you a policy, they should stand behind it and be able to explain it clearly when you need help. After all, they’re the ones who sold it to you! But when things don’t go as planned with a claim, people often feel frustrated and stuck.
Having been in the industry for many years, I know how important it is to ensure my clients understand what they’re buying. I make it a priority to be there when questions come up, especially when a claim happens. I also ask my clients many questions upfront because it helps me fully understand their exposures to ensure they have the right coverage.
It’s also important to remember that insurance is a contract between you and your insurer. And while it might sound like your policy covers everything, the reality is that there’s no such thing as “All Risk” coverage. Insurance was never designed to cover every possible situation, so understanding your specific coverage is crucial.
If you ever feel unsure about your policy or how a claim is being handled, don’t worry. There are resources available to help:
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Insurance Bureau of Canada (IBC)
IBC represents insurance companies in Canada, but it also offers free help to consumers through its Consumer Information Centres. Experienced professionals are ready to answer your questions and guide you through any concerns or questions.
Visit their website.
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General Insurance OmbudService (GIO)
The GIO is an independent service that provides free and impartial help to Canadian consumers. Whether you have questions or are facing a dispute with your insurer, they support you with home, auto, or business insurance issues.
Check them out.
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Alberta Government – Insurance Act of Alberta
The Insurance Act of Alberta outlines insurance company requirements regarding complaints. There is also a mechanism called the Dispute Resolution Process for disputes revolving around repairs, replacements, values, and the amount of loss or damage. For more detailed information, refer to this site.
While having the right insurance agent matters, don’t hesitate to get a second opinion or seek additional support. These resources are there to make sure you’re never left navigating the insurance world alone!
by Heather Cournoyer | Oct 21, 2021 | Auto Insurance, Claims, Government, Industry News, Premiums
Effective January 1, 2022, the Direct Compensation for Property Damage Regulation will change the way vehicle damages are handled in Alberta. Why is the Government changing auto insurance in Alberta and how does that impact you, the consumer?
Why is the Government changing auto insurance in Alberta?
Auto insurance premiums continue to escalate in Alberta for a number of reasons including:
- Newer model vehicles involved in a collision cost more to repair because of the sophisticated computer systems. A small bump can easily cost $2,000 just to reset the systems.
- Alberta is now the vehicle theft capital of Canada. Although Alberta represents only 12% of the Canadian population, we represent 27% of all vehicles stolen across Canada. In 2019 Ontario logged 23,992 stolen vehicles while Alberta came in at 23,535!
- Alberta has more catastrophe claims than any other province in Canada. That includes flood, fire and hail claims.
The Government of Alberta in conjunction with industry realized that streamlining the claims process could save money and help stabilize or even reduce premiums.
How does the Government changing auto insurance impact you, the consumer?
Effective January 1, 2022, if you are involved in an auto collision, you will deal with your own insurance company with respect to your vehicle damages.
- If you are at fault, you must carry collision coverage to recover your losses, subject to your deductible.
- If you are not-at-fault, DCPD will apply and you will still deal with your own insurance company. All insurers must offer a zero deductible option for DCPD.
- If you choose a deductible, this would help reduce your premium, however the deductible will apply to a claim, and you can’t recover the deductible amount from the at-fault driver.
- Fault and/or the degree of fault is now clearly outlined in the Regulation.
How will this affect my claim and my premium?
Because you are now dealing directly with your own insurance company, your damages will be handled more efficiently and without the complications of dealing with the at-fault driver’s insurance company. It also eliminates the costs involved with subrogation. That’s where insurance companies have the right to recover the vehicle damage costs from the negligent at-fault driver.
It is estimated that 42% of drivers will see a reduction in their premiums, 15% no change and 43% will see an increase of premium. These changes will more accurately reflect the cost to repair your vehicle. Owners of less expensive vehicles that cost less to repair will typically pay less for their insurance. Similarly, owners of more expensive vehicles that cost more to repair may pay more. It’s a fairer system for everyone.
Do you have to do anything with regard to your insurance?
No, as the DCPD legislation is automatically effective January 1, 2022. One word of advice, however. If you do not carry collision coverage in your auto insurance contract and you are at-fault for a collision, you will have to deal with your repairs out of your own pocket, just like you do today.
In Alberta, it is the law that you carry a minimum of $200,000 Third Party Liability, Accident Benefits, and soon DCPD coverage. All other coverage remains optional. However, it is important that you understand what the optional coverage includes and also what extensions of coverage you may need. Always speak to your insurance broker to review the options.
Heather Cournoyer, CIB, CIP, is a seasoned insurance professional specializing in serving the
needs of business in Alberta and BC. She believes that consumers need to understand their
insurance program so that there are no surprises in the event of an unfortunate unforeseen loss.
Contact her at heather@thinkinsure.ca or 587-597-5478 for further information.
by Heather Cournoyer | Apr 2, 2019 | Auto Insurance, Government
This is a quote from the movie Network a 1976 film about a TV Network and exploitation. And that’s exactly how I and many insurance industry professionals and consumers are feeling right now. And it’s not about a TV Network. It’s about auto insurance in the Province of Alberta and how the NDP Government are causing hardship to many Alberta Consumers!
For those of you who don’t remember the film check out this link! https://en.wikiquote.org/wiki/Network_(film)
In November of 2018 I wrote a letter to multiple political representatives on both sides of our current government. Here’s an excerpt of my letter:
On December 4, 2017, the NDP Government thought it wise to impose a 5% cap on increases for auto insurance across the province. That’s akin to telling all grocery stores that they can’t increase their cost of meat or milk at the retail level when they don’t control their wholesale costs. So, what does the grocer do? He has to make up for his losses somewhere. He has several choices.
1. Stop selling meat or milk at all.
2. Increase the cost of his other products to make up for the shortfall.
3. Reduce the quality of the product he sells.
4. Close all his stores in the Province.;
I can tell you now that this is precisely what you are forcing the private insurance companies in Alberta to do. And guess who is now being affected in a very major way. CONSUMERS – the very people you were intending to help. Yes, and your consumers are your VOTERS!
I am also a consumer and a voter. I am also an insurance broker in Alberta and have been for 42 years. I’ve seen hard and soft markets and this is the worst situation that I have ever experienced in Alberta!!
Here’s a notice from just one of the insurers that my brokerage deals with:
“The unfortunate reality is that when regulators intervene to artificially control market conditions – either because they don’t accept insurers’ data and loss trends, or because they’re politically motivated to keep premiums low – then companies are forced to seek alternative ways of stemming losses, deflecting business and preserving capital.
I know that some of these measures are tough for customers to understand and it’s unfortunate that the industry finds itself in this position. However, these situations only reinforce your role and I truly think customers will see the fantastic value that you provide with your guidance and counsel. On our end, we continue to actively work with regulators and provincial governments to rectify this situation and bring valuable reform to the financial performance and stability of the industry overall.”
Here’s the response from Joe Ceci, our Minister of Finance who continues to ignore and delay in hopes of possibly being re-elected?
“Dear Ms. Cournoyer:
The Honourable Rachel Notley, Premier of Alberta, has forwarded a copy of your November 1, 2018, email regarding automobile insurance in Alberta. Premier Notley has asked me to respond on behalf of our government. As President of Treasury Board, Minister of Finance, responsible for the Insurance Act, I am pleased to respond.
Through the five per cent rate increase limitation, our government’s goal is to strike a balance between Albertans’ need for fair and affordable automobile insurance and the insurance industry’s need for a viable and sustainable market. My department is working very closely with the Insurance Bureau of Canada, the Insurance Brokers Association of Alberta, and insurance company representatives to find the right balance for both consumers and the industry. While we recently extended the cap, we did so for only nine months to give us time to find longer term solutions to the issues industry is facing. To this end, we are conducting a claims and costs study to provide government with information about cost pressures industry is experiencing.
Our government is aware that some insurance brokers, such as yourself, are facing challenges resulting from insurers attempting to reduce their exposure in Alberta by taking various actions, such as cancelling broker contracts, restricting access to premium payment plans, and limiting access to coverage. The Office of the Superintendent of Insurance is monitoring the situation closely to ensure that automobile insurance remains available for Albertans, and that insurance companies remain compliant with the Act. If you have information that an insurance company has violated the Act or its regulations, please contact the Superintendent toll-free by telephone, at 310-0000 (wait for the tone, then dial at 780-643 2237), or by email at tbf.insurance@gov.ab.ca.
In Alberta, we continue to benefit from a competitive market, and property insurance remains readily available. In order for Albertans to find the best rate and product, I encourage consumers to shop the open market to ensure their needs are met. Insurance brokers, such as yourself, are well equipped to find consumers appropriate coverage at the best price. I also acknowledge that insurance can be confusing and difficult to understand for some Albertans, including seniors. I commend you for your professional dedication in helping Albertans find and understand the coverage that best meets their needs.
Thank you for taking the time to write.
Sincerely,
Joe Ceci
President of Treasury Board,
Minister of Finance”
Just this morning I have dealt with three individuals who have impeccable driving records, no claims and are simply trying to make a living to support their families. All of the following situations are a direct result of our Provincial Government interfering in private industry! I might add that I don’t do a lot of personal insurance. I’m a commercial insurance broker so 90% of by clients are business owners.
1. Insured, who is a senior citizen, has been on a monthly payment plan for years and 30 days prior to renewal is told he won’t have a payment plan this year. He must pay over $1,000 upfront or as of April 30 will have no insurance. This widower is on a very fixed income. So, does he park his car, not buy groceries, not buy house insurance?
2. Long time client of insurer is told they must complete a new application on renewal which the client is doing. By completing a new application, this now gives the insurer the right to not offer physical damage coverage and possibly take away their monthly payment plan. How will this family of 4, living pay cheque to pay cheque come up with $5,000 to pay their auto insurance premium within a very short period of time?
3. Broker in Alberta has had their contract to write insurance with one of their companies cancelled. Insured starts shopping for insurance. Two brokers already have had to turn him away as the companies they deal with will not provide physical damage coverage nor a payment plan. All they can offer is coverage through The Facility Association at an extremely high premium. The client’s insurance expires on April 4! He’s still shopping!
Again quoting the Honorable Joe Ceci:
“The Office of the Superintendent of Insurance is monitoring the situation closely to ensure that automobile insurance remains available for Albertans, and that insurance companies remain compliant with the Act.”
All I can say to him and his government is that it’s not working! The insurance companies are in fact following the letter of the law! The laws the Government of Alberta has put in place!
And it’s the consumers in Alberta who are suffering once again.
Yes, I’m mad as hell and for my part I will keep fighting for my clients!
So, what can you do?
I call on all insurance professionals in Alberta to send an example of hardship caused to Alberta consumers!
I call on all consumers who have been affected or if you know someone who has been call or email.
Superintendent of Insurance – toll-free by telephone, at 310-0000 (wait for the tone, then dial at 780-643 2237), or by email at tbf.insurance@gov.ab.ca.
Heather Cournoyer, CCIB CIP – contact: heather@thinkinsure.ca
