Due to the rise in injury insurance claims, Alberta auto insurance rates will remain steady for the next year.
There was a drop in rates by 5% in the last two years as there was a decline in the number of insurance injury claims, stated Del Dyck, Executive Director, from Automobile Insurance Rate Board that conducts the annual rate review.
Since 2003, the frequency of the bodily injury claims have been decreasing, not just in Alberta, but all across Canada as well, stated Dyck. However, they did see quite a significant change during 2010, when there was an increase of 5%.
Due to the lesser claims in the last few years, the insurers dropped their rates as costs had lowered.
This decision affects only the mandatory insurance and that includes third-party liability as well as accident benefits. However, the rates for optional coverage such as collision and comprehensive coverage are set by the individual insurers.
Around 80% of the motorists in Alberta carry such coverage that makes up to 45% of the total auto insurance bills.
Ever since the introduction of the auto insurance reforms during 2004, the premiums for mandatory auto insurance coverage has decreased by 23%, stated Dyck.
The decision not to hike the rates was as a result of the presentation made by the Albertans, the board’s actuary and the insurers, and the board’s consumer representative during an open meeting that was held in June.
However, Mark McCourt, who is an Edmonton injury lawyer was quite disappointed due to the stagnant rates and strongly feels that it should have been lowered. He added that Albertans will in any case pay more due to the increase in non-mandatory insurance.
McCourt also claimed that though the Alberta government had slashed insurance compensation for those injured in auto accidents, and promised that this would eventually result in lesser premiums, most Albertans were in fact paying higher auto insurance rates than what they used to prior to the enactment of the injury compensation cap.
Insurers were just increasing optional insurance only to be able to compensate for any eventual drop in mandatory rates, he stated.
As part of the package of government reforms, the board had been established during 2004, and it was aimed at reducing the insurance costs that were high.
The government had expected this package to save motorist around $200 million a year and insurance companies had been expected to cover up the losses via a controversial cap of $4,000 on pain and suffering awards.
