Alberta’s United Conservative Party (UCP) government has chosen not to renew the cap on auto insurance rate increases imposed by the previous NDP government.
The cap limited auto insurance rate increases made in Alberta to a maximum of 5%. The rate increase limitation applies to an insurance company’s entire private passenger automobile insurance business – not individual insurance policies. It was set to expire on August 31, 2019.
CityNews warned that drivers’ rates could rise soon as a result of the cap’s dismissal.
Finance press secretary Charlotte Taillon explained that the Automobile Insurance Rate Board will be responsible for adjusting auto insurance rates moving forward.
The government’s decision to lift the cap has been met with strong support from the Insurance Bureau of Canada (IBC).
“We’re hoping to see some of the issues addressed within the system, and we’re also looking to just open up the insurance market a little bit more,” said IBC Western vice-president Celyeste Power.
The rate cap was seen by some within the industry as a poor attempt by the NDP government to control car insurance prices. When the cap was first introduced, some insurers realized that they stood to lose more if they could not raise their rates to reflect the cost of claims. Those insurers pulled out of the market, leaving the remaining auto insurers in Alberta no choice but to price their coverage even higher.