Insurance Bureau of Canada protests Alberta's 'unfair' auto insurance system

(Pexels/Matheus Bertelli)

The Insurance Bureau of Canada says Alberta's good drivers are being forced to pay for the mistakes of bad ones and the system needs to change.

The IBC, using data from a Deloitte LLP report, said Wednesday they discovered that the province's worst drivers have been offered subsidized insurance rates for the past 20 years.

Under Alberta's grid rating system, the agency says, high-risk drivers are offered a cap on the amount of premiums they would be required to pay.

"This means no matter how many at-fault collisions or infractions they have, high-risk drivers will never pay more than a set maximum amount," the IBC said in a news release.

When the system was first put in place in 2004, the IBC says it worked to help new drivers access affordable premiums but now it's become too large and covers many drivers it was not designed to help.

The Deloitte report found "safe" drivers are charged $180 million in auto insurance premiums - $65 per driver – to subsidize the premiums of high-risk drivers.

It also found that Alberta's worst drivers are being offered average annual subsidies of $9,859.

"Insurance encourages safe driving habits and is a vital public safety tool. There is no public-policy rationale for subsidizing the premiums of high-risk drivers with a history of at-fault claims and/or infractions," said Aaron Sutherland, IBC's Pacific and Western vice-president.

"This is unfair and works against the very thing the government should seek to encourage – safe driving."

Since the grid system no longer operates as intended, the IBC says it should be either removed or "substantially reformed."

In a statement Wednesday, the Alberta government said the price protection policies are meant to protect good drivers from significant rate increases in the interim, while they work on “more sustainable reform options for the auto insurance system.”

“Alberta’s government is exploring all options to make auto insurance more affordable in Alberta,” Savannah Johannsen, a spokesperson with the Ministry of Treasury Board and Finance, said.

“We have commissioned an external consultant to conduct an in-depth analysis to inform long-term reforms. The insurance models of other jurisdictions – both within Canada and abroad are also being analyzed.”

The results of the province’s analysis will help inform decisions on long-term policy solutions to address auto insurance affordability.

IBC's Deloitte report can be found here.