Alberta’s government makes good drivers pay more for insurance to subsidize bad drivers.

Why are good drivers like you paying $180 million more in auto insurance for bad drivers?

Unique to Alberta, the Grid rating program was established in 2004 to make insurance more affordable for new drivers by allocating a portion of the premiums from good drivers to subsidize those with less experience. While that’s important, the Grid has grown dramatically in recent years, and now charges good drivers much more than is justified in order to provide subsidized insurance for those exhibiting dangerous behavior on our roadways and with a history of at-fault accidents and infractions.

In light of this, Insurance Bureau of Canada (IBC) commissioned Deloitte LLP to assess Alberta’s auto insurance Grid rating system, and to provide recommendations to better-align the framework with its original intent.

The Impact of Alberta’s Grid System

Good drivers pay higher premiums in order to subsidize others, including bad drivers with a history of accidents and infractions.

In total, good drivers paid $180 million more in auto insurance premiums than they should have in 2021.

Over half of Grid drivers are not new drivers. 52% of Grid drivers have more that 7 years experience, and are not the drivers the system is intended to support.

The number of Grid drivers is expected to nearly double this year (from 77,000 in 2021 to 133,000 in 2022), further increasing its cost to good drivers.

What can we do about it?

The Grid is no longer meeting its original intent and places a significant strain on the affordability of auto insurance in the province. It is an overly complex and antiquated mechanism that penalizes good drivers in the province in order to provide a subsidy to those exhibiting high-risk behaviours. In doing so, it actually incentivizes dangerous behaviour on our roadways and works against other measures that promote safe driving.

Clearly, it’s time for change.

Alberta’s Grid framework needs to be replaced with a new system that better supports new drivers to build their experience and improve their premiums.

In the near term, however, Deloitte has identified the following actions to help re-align the Grid to better support new and inexperienced drivers while reducing its costs overall:

  • Enable minor-conviction surcharges beginning at Grid step 1, as opposed to the current Grid step 2.
  • Include at-fault claims, other than third-party liability claims, in moving drivers up or down Grid steps.
  • Reduce the number of years that drivers are subject to Grid ratings by phasing out Grid steps –7 to –15 over the next three years.
  • Refocus the Grid to provide subsidies only to those with seven years of driving experience or less.

There is no public-policy rationale in providing subsidized premiums to high-risk drivers with a history of at-fault claims and/or infractions in Alberta. Under the current system, the Grid charges good drivers more and works against the very thing we should seek to encourage most – safe driving.

Read the full Deloitte Report

Albertans deserve affordable auto insurance they can count on.

Learn more about what insurers are recommending to fix Alberta’s broken auto insurance system.

Read the Enhancing Care & Expanding Choice Proposal