Do you have questions about auto insurance in Alberta? Call IBC’s Insurance Hotline at  1-844-2ask-IBC.

Frequently Asked Questions

Auto Insurance Reform

What does Direct Compensation for Property Damage (DCPD) mean for Alberta drivers?2021-11-01T11:55:50-04:00

On January 1, 2022, Alberta will adopt a Direct Compensation for Property Damage (DCPD) system – which will improve the way Alberta’s insurers support their customers following collisions. You can learn more about DCDP at

What do the recent changes to Alberta’s auto insurance system mean for consumers?2020-12-17T10:24:29-05:00

The changes the government made to the auto insurance system focus on controlling claims costs, which will help stabilize premiums for consumers and make insurance more affordable. Changes to the insurance system will also increase medical care for Albertans injured in collisions by providing more pre-approved treatment for people who are injured.  Learn more about these changes to the insurance system and others here.

How will recent government changes to auto insurance help consumers save money?2020-12-17T10:25:45-05:00

Rapidly rising claims costs, particularly costs for settling claims associated with minor injuries after a collision, has been the biggest factor in premium increases for Alberta drivers.

To put things into context, between 2011 and 2019 the average size of a bodily injury claim went up by approximately 80%. As claims payouts increased, insurance premiums had to rise to cover those costs.

Changes to the minor injury definition means that court settlements for common minor injuries such as sprains, strains and whiplash will no longer be in line with far more serious injuries. There were also changes to the interest paid on pain and suffering awards, which had been far above today’s interest rates and had been contributing to rising claims costs.

The insurance industry estimates that these reforms should help stabilize premiums.

What changes did the government make to fix the system?2020-12-17T10:21:39-05:00

The Alberta government’s changes to auto insurance are designed to reduce red tape, increase medical care, expand options for drivers, and make auto insurance more affordable. They include improving the medical care Albertans receive if they are in a collision and giving drivers more choice by allowing innovative and flexible options such as pay-per-kilometre insurance. Learn more about these changes and others here.

Why focus on settlements for minor injuries and awards given to drivers in court?2020-12-17T09:55:28-05:00

Disproportionate pain and suffering awards for sprains and strains are making insurance unaffordable for everyone.

Regulations that governed awards for minor injuries ultimately impacted every driver. It was where the insurance system saw the largest drain on resources, and also where few consumers actually saw benefit. This money and resources used in this portion of the system does not go toward helping drivers recover.

In fact, since challenges to the Minor Injury Regulation in 2012, claims costs associated with bodily injury increased by nearly 8% per year, going from an average of $41,169 in 2011 to $74,258 in 2019. Over that time, insurers paid out considerably more in claims, expenses and premium taxes for every dollar they collected in premiums. As a result, Alberta drivers now pay the third highest premiums in Canada.

What changes have been made to the minor injury definition?2020-12-17T09:55:02-05:00

Since a 2012 court decision allowed for an unintended interpretation to the definition of minor injuries, claims costs increased significantly.

Recent changes announced by the government has revised the definition of a minor injury so that settlements for common sprains, strains and whiplash injuries should no longer be for amounts in line with far more serious injuries. More serious injuries, such as fractures or those that have a permanent negative or life-altering impact, are not considered minor.

The insurance industry estimates that the reforms should reduce claims costs enough to help stabilize premiums. Recent reforms also mean accident victims with more serious injuries will now have access to more of the care and benefits needed to recover.

Who decides what is considered a minor injury?2020-12-17T09:54:30-05:00

The insurance industry believes that the definition of a minor injury should be determined by prevailing medical literature, not insurers or lawyers.

Who determines the care collision victims receive?2020-12-17T09:54:02-05:00

The insurance industry believes anyone with an injury should get the care they need, when they need it. We also believe treatment should be based on prevailing medical literature by doctors and health care experts, and not decided by insurers or lawyers.

What do recent reform changes mean for Alberta drivers whose vehicles are damaged in a collision?2020-12-17T09:49:51-05:00

With the recent changes announced by the government in Bill 41, it is now more convenient for drivers to get their vehicle repaired or replaced after an accident. Prior to the changes, a driver whose vehicle was damaged in a collision would need to work with the at-fault driver’s insurer to coordinate repairs or the replacement of their vehicle. Now, drivers can seamlessly work with their own insurer on all claims and repairs.

What’s next for the Insurance Industry in Alberta?

Insurance Bureau of Canada and the insurance industry is committed to continuing to work with the government and other stakeholders on further improving our Alberta’s auto insurance system. Bill 41 is a great step forward, but as efforts continue in working to stabilize premiums and maintain affordable options for consumers, the insurance industry believes bringing a hybrid insurance system to Alberta is a long term solution for bringing a stable insurance system to the province.   A hybrid system, that provides choice and control in what kind of policy consumers want, along with increased levels of care is the best way to go for Albertans.

I’ve heard that insurers want a no-fault auto insurance system that will take away benefits?2020-06-11T14:55:17-04:00

IBC and its members are not advocating for a no-fault auto insurance system. We are advocating for balanced changes to the current auto insurance system that will keep auto insurance affordable while increasing choice and care for those who need it.

All the data shows that the insurance system is no longer working for Alberta’s 3 million drivers.

To learn more about what the insurance industry has recommended to the Government of Alberta, please see Driving Change: Auto Insurance That Works.

How will fewer insurance regulations benefit consumers?2020-12-17T10:21:10-05:00

The insurance industry believes in fair and balanced regulations. In fact, we believe the auto insurance industry should be regulated. Regulations should protect consumers from risk, but not prevent choice, innovation and change.

The right regulations in place makes it easier for insurers to better serve consumers as they are allowed to more easily and efficiently provide the products and services consumers expect and deserve.

The right regulations in place creates an environment where insurers can be more responsive to the needs of consumers and also provides consumers with access to more choice and innovative products. For example, with Bill 41 now in place, insurers should be able to give consumers the choice to have their premiums based on how often they use their vehicles and how they behave behind the wheel. This is good for drivers.

Removing or updating outdated and cumbersome regulations is a win for Albertans. It will make insurance more affordable for consumers and help stabilize the province’s insurance market.

Why did the government have to take an active part in fixing insurance?2020-12-17T10:20:17-05:00

Insurers and insurance intermediaries cannot ­fix the auto insurance system themselves. The Alberta government sets the rules that insurers must follow, including the prices insurers can charge. Alberta’s insurance industry is dedicated to working with the provincial government to make changes that will lead to a healthier, more sustainable insurance market.

Is a cash settlement the best solution for victims injured in a car collision?2020-12-17T09:58:55-05:00

The best solution should be a focus on providing care so that victims of collisions can recover from their injuries. We believe that for innocent victims of negligent or impaired drivers, the best solution is to get all of the medical care they need to get better.

What will fix the auto insurance system?2020-06-11T14:55:43-04:00

All groups need to work with the government’s expert committee on auto insurance to develop outcomes that will improve the system for Alberta’s 3 million drivers.


Auto Insurance Premiums

How are auto insurance rates set?2020-06-11T14:57:44-04:00

The Superintendent of Insurance approves rating factors that insurers may use to set their rates, such as where an individual lives and their years of driving experience, among others. In addition, the independent rate regulator, the AIRB, reviews auto insurers’ proposed rate changes, including actuarial assumptions such as projected claims cost increases, operating expenses and maximum permitted profit margins. Based on those factors, it makes a decision on insurers’ requested rate changes. AIRB full rate filing guidelines can be found here.

This process takes at least 90 days from the time an insurer submits a rate filing to when the first consumer sees the rate change.

How long does it take to get rates approved?2020-06-11T14:58:18-04:00

After making a rate change proposal, insurers must wait between 30- and 60-days before those rates are approved. After that, consumers are sent renewal notices at least a month before their new rates are proposed to come into effect. In all, it could take more than 90 days from rates being submitted to consumers seeing those rates. Rates posted today were submitted to the AIRB months ago.

What is an insurer’s market share?2020-06-11T15:01:08-04:00

This represents how much premium an insurer writes relative to the total size of the market. The higher the market share, the more policyholders the insurer serves.

What can consumers do to lower their premiums?2020-12-17T09:51:05-05:00

Alberta’s insurers agree that auto insurance should be more affordable and are continuing to work with government and stakeholders to advocate for continued balanced changes that will further stabilize premiums for Alberta drivers. There are also 22 insurer groups (or 46 insurers) operating in Alberta that compete for consumers’ business. Consumers should shop around – it is proven to help drivers find better rates.

Since the start of the COVID-19 pandemic, the property and casualty insurance industry has also provided more than $1 billion in personal and commercial insurance relief to help Canadians impacted by the pandemic, plus an additional $200 million in deferred premiums to personal and commercial customers. These figures will continue to rise over the coming months as the industry continues to support Canadians through this challenging period.

Do insurance companies just file for the highest rates possible?2020-06-11T14:57:27-04:00

No. Alberta has a competitive insurance market and insurers compete for Albertans’ hard-earned premium dollars. Many insurers request less than their justified rates as a consumer focused measure or to try to increase their market share.

The AIRB also closely monitors and approves the rates insurers can charge. No insurer can increase or even decrease their rates without explicit approval from the independent AIRB.

How often do these rate filings happen?2020-06-11T14:58:42-04:00

Filings go to the AIRB on a regular basis. This could be to request a rate increase or decrease or to change how insurers calculate their rates. The AIRB typically posts approved rates on a quarterly basis, which means that some of the decisions were made up to 90 days before the posting. Filing approval decisions are made in accordance with the Automobile Insurance Premiums Regulation.

Why aren’t the rate changes communicated earlier?2020-06-11T14:59:16-04:00

The AIRB does not disclose information about rate filing decisions prematurely for competitive reasons, as it might give other companies an unfair advantage over their competitors.

What are some of the factors that go into calculating drivers’ premiums?2020-06-11T15:00:21-04:00

Auto insurance premiums are calculated using many different factors (e.g., number of years driving, claims history, traffic convictions, where the driver lives, and type of vehicle or coverage selected). Different insurers use their claims data to determine how these factors are weighed. For example, some insurers may place a larger emphasis on number of kilometres driven per year, while others place a greater emphasis prior claims history. Factors used must be authorized by the Superintendent.

Can an insurance company charge whatever it wants for premiums?2020-06-11T14:56:59-04:00

No. Auto insurance in Alberta is heavily regulated. Premium changes are approved by the independent rate regulator, the Alberta Auto Insurance Rate Board. The provincial regulator approves premiums based on data from insurers and the General Insurance Statistical Agency (GISA), which is made up of provincial insurance regulators from across Canada.

Do consumers have to stay with the same insurance provider?2020-06-11T15:01:38-04:00

No. Consumers can choose among different insurers’ pricing mechanisms and benefit options to find a policy that best suits their circumstances. In Alberta’s competitive marketplace, customers can shop around not only for the most suitable product, but also the best price.

Are insurers’ operating costs a contributing cost to premiums?2020-12-17T09:52:44-05:00

According to data from GISA, Alberta insurers’ operating expenses are in line with the rest of the country. Instead, the primary driver behind the increase in premiums is the rising costs of settling injury claims, including legal costs, after a collision. After being stable, the average bodily injury claims cost has increased by nearly 8% per year, from $41,169 in 2011 to $74,258 in 2019, according to Oliver Wyman, the Alberta Automobile Insurance Rate Board’s consulting actuary.

*Sources: 2020 Oliver Wyman Annual Review Report (2015-2019 Data, page 16), 2019 Oliver Wyman Annual Review Report (2014 Data, page 14), 2018 Annual Review Report (2012-2013 Data, page 15), and 2017 Annual Review Report (2011 Data, page 24)

Are insurers making a profit from investing premiums?2020-06-11T15:02:51-04:00

Insurers generate income and ensure they have enough money to pay claims through the premiums drivers pay and investments income. With 69% of investments in low-risk bonds, insurers generally see low investment income. Investment returns in 2018 were at 2.0%*, the lowest on record, while inflation was at 1.9%.

When filing for a rate change with the Alberta Insurance Rate Board (AIRB), insurers must factor in their own expected investment return. Given today’s low interest rates, the Alberta Insurance Rate Board (AIRB) is currently using a benchmark investment return rate of 2.84%.**

*IBC 2019 Fact Book (page 14).


Bodily Injury Claims

Why are the rate increases higher than in past years?2020-07-03T18:32:07-04:00

After years of an affordable and stable auto insurance system in Alberta, claims costs relating to bodily injury claims have skyrocketed by over 80% since 2011. These costs are driving premiums up. The insurance industry wants to work with the Government of Alberta to fix the issues in the system and deliver an affordable auto insurance product over the long term.

Why do my auto insurance premiums keep going up?2020-12-17T09:56:30-05:00

There’s a big reason – and that’s the rising costs associated with settlements resulting from minor injury claims after a collision. When all claims costs, including operating expenses and premium taxes are accounted for, on average, insurers paid out $1.12 for every $1 earned in premiums between 2015 and 2019.*

*Source: IBC with data from Dr. Ron Miller

A recent report suggested bodily injury claims are not the main reason for increasing insurance rates. Is this true?2020-06-11T15:19:52-04:00

No, this is not accurate. There is a lot of data from experts including the independent rate regulator’s actuary, Oliver Wyman, that shows bodily injury claims have increased significantly since 2011. These increased claims costs are the primary cause of premium increases in the auto insurance system.

What do bodily injury claims have to do with my insurance premium?2020-12-17T09:58:08-05:00

The average size of a bodily injury claim has gone up by approximately 80% since 2011, which is a staggering increase. As claims costs increased, insurance premiums had to go up to cover those additional claims costs.



What data did you use to determine how much bodily injury claims have risen?2020-07-03T18:30:56-04:00

Insurance Bureau of Canada uses third-party data that is pulled directly from a report from Oliver Wyman, Alberta’s independent rate regulator’s actuary. The report is available publicly on the Alberta Automobile Insurance Rate Board’s website.



What is The General Insurance Statistical Agency (GISA)?2020-06-15T16:39:26-04:00

Learn more about The General Insurance Statistical Agency (GISA) here.

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