April 3rd, 2020

Alberta drivers paying the price for province lifting cap on insurance

By Mabell, Dave on January 16, 2020.

Dave Mabell

Lethbridge Herald

dmabell@lethbridgeherald.com

For Alberta drivers, it’s a double whammy. The temperature’s gone down, but the insurance rates are heading up.

Motorists opening their mail are seeing renewal offers with auto insurance coverage jumping as much as 30 per cent this winter. Some other insurance companies’ offers are less demanding.

But they’re coming at a time when a number of tax increases are in the works, and Lethbridge West MLA Shannon Phillips says her office has been fielding many calls complaining about the hikes.

Before last spring’s election, she explains, the New Democratic government had limited increases to five per cent a year. Retired people, students and young working families are now feeling the pinch, she says.

“People are shocked and surprised,” Phillips says. “It’s a real issue that is affecting a lot of people.”

A recent report from the province’s Automobile Insurance Rate Board shows almost every company in the market filed for rate increase approval after the previous government’s rate cap expired at the end of August.

The report shows one company, Peace Hills General Insurance Co., was granted increases of 27.9 per cent for basic insurance and 8.5 per cent for additional coverage. The impact on typical premium quotations was not shown.

Hikes like that are unheard of in neighbouring provinces, where public insurance plans cover all drivers – and proposed changes are subject to government approval.

The report also shows some major underwriters like Alberta Motor Association Insurance and Allstate Insurance Company of Canada did not file for increases during the fourth quarter (October to December) of 2019 – though they may have filed in September.

But clients of some Alberta insurers report a $1,200 premium last year has suddenly jumped to $1,600.

For most constituents who call her office, Phillips says the typical hike is ranging between $200 and $300 a year.

Those increases were approved, she maintains, after one of Premier Jason Kenney’s leadership campaign backers began acting as a lobbyist for the auto insurance industry.

Combined with ongoing tax hikes triggered by the recent Kenney government budget – income tax, property tax, school fees, even drivers’ licences – Phillips says “this is really beginning to bite.”

For Albertans who’ve lived in other provinces, however, the higher rates may not seem far out of line. In British Columbia, rates (and risks) vary between metro Vancouver and other locations. A new basic policy for a five-year-old Toyota Corolla in Kelowna, for example, would run close to $2,040.

That coverage would be provided by the provincial government’s in-house insurance agency. An owner could also choose to pay more than $5,000 for additional coverage from a private-sector company.

But to the east, the Saskatchewan Government Insurance agency would charge $1,494 for that same car, including vehicle registration and insurance. And owners of a larger vehicle, like a middle-aged Ford F-150 Supercrew, would pay about the same.

Saskatchewan rates aren’t influenced by place of residence – whether in the city or a distant village – and officials say the basic package includes theft and collision as well as liability. The standard deductible is $700 and drivers earn a larger discount for each year without an at-fault accident.

But in addition to the government-mandated public insurance – a service aimed at breaking even each year – Saskatchewan officials say there’s also SGI Canada Insurance Services. It’s a limited, profit-oriented company that’s expected to pay a “dividend” to the provincial treasury every year.

The business offers additional coverage to motorists in its home province and others including Alberta, where it’s among many that filed recently for rate hikes. As approved, SGI recently hiked basic coverage for Albertans by 13.2 per cent. And for more comprehensive add-ons, Alberta drivers will pay an extra 18.6 per cent.

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