3.7%. Remember that number.
Get the straight goods before the news officially hits the streets.
For the better part of a year, Premier Danielle Smith has vowed she would tackle high insurance premiums in Alberta.
On Wednesday morning, Smith and her UCP government will roll out their plan.
The short-term plan, the first step, has some specifics attached to it. The long-term plan will be fleshed out early in the new year.
So here goes.
The province’s pause on auto insurance rate hikes is gone at the end of the year.
Starting January 1, 2024, Albertans with good driving records will see auto insurance rates increase by no higher than what the rate of inflation was in September of this year.
That’s a maximum 3.7% hike on vehicle premiums.
A driver with a good driving record is defined as everyone EXCEPT those with one or more at-fault accidents in the last six years, any Criminal Code traffic convictions in the last four years, any major traffic convictions in the last three years, or more than one minor traffic conviction in the last three years.
Under the Smith government’s plan, the province’s Automobile Insurance Rate Board will have the power to tell individual insurance companies to return to drivers a portion of the premiums collected in those years where profits are significantly higher.
The rate board will monitor carefully rate increases in 2024 to ensure they are reasonable and can be justified.
The rate board will also be able to to review and possibly lower the rates of any insurer if necessary.
In other words, the Automobile Insurance Rate Board will have more power to regulate the auto insurance companies operating in Alberta.
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The Smith government has also hired deep-thinkers to do a deep-dive into what places elsewhere are doing to get a grip on high insurance rates.
An interim report on that look-see will come to the Alberta government by the end of the year. The final report is expected in the first three months of the new year.
Nate Horner, the Smith government’s budget boss, is also riding point on the insurance file.
Horner says the probe into the best practices elsewhere will leave no stone unturned.
“The report is very sweeping. Everything is on the table,” says Horner.
“They’re looking at some different no-fault systems, with government delivery, with private delivery.”
Horner says they’re looking at New Jersey, “where they were absolutely the most expensive and had the worst track record and they’ve really turned things around.”
He says they’re looking at everywhere from the Australian state of New South Wales to individual states in the U.S., to other countries, to other provinces.
“It’s very, very sweeping,” says Horner.
The man responsible for overseeing insurance says the premier has not been ideological in handling this file.
“She’d be the first one to tell us to make sure the report looks at everything. She just wants to be pragmatic.”
And for the premier, a self-described lover of free markets, insurance is not a true free market.
If you own and operate a vehicle the government says you must have insurance.
“I’m like the premier. I don’t like dabbling in markets but this is not a free market.”
That’s why Horner says they want to sure make sure the rate board “has teeth to protect Albertans.”
As for the Smith government’s long-term fix in early 2024, Horner says it has to look at costs.
And, though Horner insists he is not putting the cart before the horse and pre-supposing what the report will say on long-term solutions to pricey insurance, he says there has to be talk about “the legal aspects around bodily injury.”
“The next step will have to look at actually removing the cost.”
Questions like: Who can sue and when, if ever and for much?
A recent rate board survey says fewer than one in five Albertans have a high level of agreement with the idea auto insurance premiums are fair and reasonable.
The same nose-count found “a general skepticism about the insurance industry’s practices.”
There was general frustration with rising insurance costs.
Calls to the rate board “increased drastically” this year.
To those who say the Smith government is not doing enough, not going far enough, Horner says the plan is “going to protect good drivers in Alberta especially and we’ll see where it takes us in the very near future.”
Of course, some insurance companies are expected to be unhappy.
Horner says they should be happy right now. After all, the government could have extended the pause on premium hikes.