Alberta NDP drafts bill to freeze auto insurance rates for a year

The Alberta NDP wants the UCP goverment to get on board with a private member's bill to freeze auto insurance rates for one year, to allow the government to take a good look at why Albertans are paying so much.

The Alberta NDP says they have an idea to tackle sky-high auto insurance rates that they blame the UCP government for doing nothing about.

The Official Opposition's justice critic, Irfan Sabir, says his private member's bill, called Bill 206 – the Insurance (Private Passenger Vehicle Premium) Amendment Act – would free car insurance rates for a period of one year.

"The bill suspends the authority of the auto insurance rate board to approve rate increases of more than zero per cent," Sabir said. "It also suspends the authority of the minister of finance to direct the rate board to approve any increases for one year."

He says the current high rates are the result of the UCP "giving a break to their friends in the insurance industry."

"Thanks to the UCP, Alberta drivers are stuck with the most expensive auto insurance in Canada," Sabir said.

That data was released earlier this week, with the accounting firm Ernst and Young publishing a report for the Insurance Corporation of British Columbia (ICBC).

In that document, Albertans were found to pay as much as four times more than drivers in other provinces for similar amounts of coverage.

However, the Insurance Bureau of Canada says the data used for the report could be flawed, suggesting that since it was written for ICBC, a government-controlled provider of insurance in B.C., it may ignore some of the facts.

"I don't expect monopolies to understand how people shop the market, but this is really a gross misrepresentation of the market in Alberta, of how people behave and how drivers are able to shop around to find savings to get the best product at the best possible price," said Aaron Sutherland, vice-president western and pacific for the Insurance Bureau of Canada (IBC).

Alberta has also maintained an at-fault or tort system, meaning one driver bears the burden for damage.

In a no-fault system, everyone involved pays and there are no opportunities to sue for damages or for injuries.

HOW AND WHY INSURANCE HAS CHANGED

While the NDP was in government in Alberta, a cap was installed on insurance rates, forcing companies to keep premiums low.

The UCP government, upon assuming office, removed the cap after saying they were damaging to both the industry and drivers.

"The NDP rate cap caused many drivers to pay a full year's premium up-front, rather than monthly, and many were denied collision and comprehensive coverage," said Alberta Finance Minister Travis Toews in a statement this week.

He says Alberta drivers are also enjoying better coverage under the UCP.

"Alberta drivers saw improvements such as stabilized rates, increased insurance options and flexibility. Albertans injured in traffic accidents can now access more health professionals, like dentists and psychologists, through their insurance claim."

PREMIER OPEN TO THE ISSUE

Sabir said the one-year time period suggested in his bill will allow the government to take a hard look for a sustainable solution to high insurance rates for Albertans.

He feels the current government will be receptive to his bill, especially considering the sentiments from the Alberta premier earlier this week.

"I was very interested to hear Danielle Smith in the house on Tuesday saying that she understood that there is a 'serious problem' with the cost of car insurance and she wants to find a solution."

While Smith suggested she would look at the issue in the new year, Sabir says there is no reason to wait and the bill should be passed before the end of the session.

"(We should) get every Albertan driver some holiday cheer."

WILL IT WORK?

While the idea of keeping premiums where they are amid rising costs in other areas does sound appealing, Alberta's insurance brokers say it's not the route to lower costs.

Barry Haggis, president of the Insurance Brokers Association of Alberta (IBAA) says "rate caps simply don't work."

"They do nothing to reduce costs within Alberta's insurance system, and simply push problems down the road while making it difficult for many drivers to obtain the coverage they need," he said in a statement on Thursday.

Haggis says everyone involved – brokers, insurers, and government officials – need to work together to form lasting solutions on affordability for drivers.

"If Bill 206 is passed, costs will only continue to build up and consumers will face the same challenges they did last time. Let's try to find real solutions that will result in lasting change for Albertans."