Do you have questions about auto insurance in Alberta? Call IBC’s Insurance Hotline at 1-844-2ask-IBC.
What’s really happening with auto insurance rates in Alberta?
Everyone wants an auto insurance system that works well for Alberta’s 3 million drivers. Recent reforms and the introduction of DCPD are a good start – and these are helping to stabilize rates.
In fact, we are already seeing rates decrease in the province.
The most recent data from the Alberta Auto Insurance Rate Board – the government’s insurance regulator – shows rate approvals have remained stable over the past 12 months.
Similarly, the General Insurance Statistical Agency’s (GISA) data also indicates average premiums in Alberta declined by 1.1% over the last 12 months (January to January). GISA is a national body of insurance regulators specifically tasked with monitoring insurance premiums in the country.
Even with record inflation, auto insurance premiums are one of the few things not adding to the increased cost of living. Statistics Canada’s data shows that auto insurance premiums declined 6.5% across Canada over the last year. This, despite the cost of vehicle parts increasing by 5%, the price for new vehicles up 7% and the cost for rental cars up 19.4% (which drives up the cost of claims) and an overall inflation rate of 6.7% in March.
Over the course of the pandemic, the insurance industry provided $3.7 billion in financial relief to home, auto and commercial consumers – a significant and unmatched effort by insurers to help Canadians when they needed it most. In Alberta alone, the industry provided over $460 million in premium relief back to their customers.
DCPD impacting premiums but benefits majority of Alberta drivers
While rates are down on average, some drivers are seeing changes in their insurance premiums based on the value of their vehicle.
On January 1, Alberta became the latest province in Canada to introduce direct compensation for property damage (DCPD) to the auto insurance market. When your vehicle is damaged and you aren’t at-fault for the accident, DCPD allows you to work with your own insurer for vehicle repairs, instead of relying on the other driver’s insurance company.
Because your own insurance company is responsible for repairing your car, DCPD better aligns insurance rates with the value and repair cost of your vehicle. While owners of more expensive vehicles may pay more for their coverage, drivers of less expensive vehicles are paying less – and that’s a fairer system for everyone. As a result of DCPD, roughly 43% of drivers are paying less for their auto insurance, and 15% are seeing no changes. An estimated 34% of drivers will see an increase in their premiums between 0% and 5%.