In one of its most high-profile moves since obtaining office, the NDP government in Alberta released its 2015 budget, and as Global News notes, the insurance industry is among the province’s “losers.”
This critique stems from the announcement that the tax on P&C insurance premiums will increase from 3% to 4% beginning on April 1, 2016, with the intention of raising an additional $158 million of revenue in the 2016-17 fiscal year.
“Increasing alcohol and tobacco taxes won’t cut it,” Alberta Union of Provincial Employees told CTV News.
The Insurance Premiums Tax was not included in the March 2015 budget when the government still boasted a $1.1 billion surplus.
Although this hike will be paid by insurers, some brokers fear that the costs could eventually trickle down to consumers.
“It could work its way into a rate increase, but then again, we might not ever know that this is what caused it specifically,” said Andrew Shareski, broker and office manager, Costen Insurance.
The Calgary-based brokerage says that base rates have already been “steadily climbing,” and that it might be hard to assess the new tax’s impact because of the nature of how auto insurance premiums are calculated.
“So much of insurance is individualized that every little factor matters, especially for auto and home policies,” Shareski said. “But this isn’t anything I’m worried about, at least not yet.”
He also notes that any impact from a 1% surge will likely be “minimal” regardless.
While Shareski plans to monitor how the market will absorb the tax increase, his concern largely lies in another domain.
“We have some home insurance policies where we’ve seen premiums double,” he said.
