NDP says numbers show auto insurance companies aren’t struggling in Alberta, asks UCP to reinstate cap on premium increases


Alberta’s NDP renewed its call on Wednesday to reintroduce auto insurance premium hikes, citing new figures they say show the sector is not struggling in the province.

The latest version of a annual report that takes a broad look at Alberta’s insurance industry shows that auto insurance companies collected just over $5.428 billion in premiums in 2019, while paying out just over $4.276 billion in claims.

The $1.15 billion difference in favor of the insurance companies is an increase from the $974 reported in 2018, the NDP said.

At a news conference, opposition service Alberta critic Jon Carson said the 2019 Superintendent of Insurance’s annual report suggests the auto insurance industry remains more profitable than some in the industry have indicated.

“(This report) debunks all UCP claims and raises serious questions about who this UCP government really works for,” Carson said. “They claimed that the tariff cap would make the companies unprofitable.

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“The OHP removed the cap, allowing insurers to increase premiums as much as they wanted. As a result, we saw insurance premiums skyrocket. In 2020 alone, there was a 24 percent increase in rates.”

Last December, Treasury Secretary Travis Toews said the previous NDP government’s cap had “pressured insurers” and resulted in Albertans being given “fewer and fewer insurance options.”

READ MORE: Alberta slams panel to review auto insurance, won’t bring back rate cap

In August 2019, the cap was not renewed under the OHP government. A report from the Automobile Insurance Rate Board earlier this year found that 27 insurers operating in Alberta have received rate increases ranging from less than one percent to nearly 30 percent for basic private passenger car coverage. However, the board also noted that it expects not only insurers to benefit from the removal of the cap, but also drivers who struggled to get the coverage they needed under the old rate cap.

READ MORE: Alberta government won’t hold on to car insurance increases

“After nearly two years of rate caps, some Albertans found it difficult to get the coverage they needed or access payment plans,” the board said in January.

“These actions by insurers were directly related to their inability to obtain approval for rates commensurate with risk.”

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Opposition finance critic Shannon Phillips said Wednesday the numbers in the new report speak for themselves, even if the gap between premiums collected and claims paid is “not all profit.”

“There are some administrative costs that have to be paid and we understand that,” she said. “(But) fares have risen 24 percent at a time when Albertans are driving less.”

READ MORE: Alberta drivers face high insurance costs, according to new figures

Phillips said she doesn’t understand the rate hikes she says are sending money to businesses outside Alberta at a time when many in the province are driving less because they are either working from home because of the COVID-19 pandemic, or have lost their money jobs.

“You wonder who the UCP work for,” she said.

On Thursday afternoon, Global News received a response to the NDP’s claims from the Treasury Secretary’s office, who said the opposition has “put a narrow focus on a much bigger problem.”

“The claim ratios included in the report only represent claims-related costs and do not include other costs such as commissions, premium taxes and administrative costs,” reads part of a statement from press secretary Jerrica Goodwin. “Car insurance premiums have been a subject of frustration in Alberta for nearly 10 years. That’s why the Alberta government has passed legislation with immediate measures to make insurance affordable for drivers in Alberta.

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“At the same time, the changes will increase coverage for diagnostic and treatment services and improve the benefits included in mandatory auto insurance. Our government is providing a more sustainable and affordable auto insurance system for Albertans. Our priority is with drivers in Alberta, not insurance companies.”

Phillips also noted that some years have been tougher for the auto insurance industry than others, citing the number of claims paid out because of the 2016 Fort McMurray wildfire. But she said, in the grand scheme of things, the numbers suggest the industry’s profit margins are increased since then.

A director of the Insurance Bureau of Canada, an organization that represents insurers, said that “the data the NDP has used to make this suggestion is simply wrong.”

“Worse, it’s misleading because they’ve excluded taxes, commissions and operating expenses,” Aaron Sutherland said in an email to Global News.

Sutherland quoted: figures released by the Automobile Insurance Rate Board this fall and said that when factoring in other expenses, the report shows that insurers paid out 105 percent of premiums in 2019.

“Obviously the industry was not profitable and even lost money,” he said. “This is a key reason for the challenges consumers and industry have been facing in recent years, and why and account 41 was so important to stabilize things and improve affordability for drivers.”

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Both Phillips and Carson called on the government to immediately freeze premium increases and reintroduce a limit on how much insurance premiums may increase once the pandemic is over.

READ MORE: Panel recommends flawless auto insurance to tackle rising, expensive premiums for Albertans

“While we were in government, we heard countless stories of Albertans facing drastic increases in their auto insurance for no reason,” said Carson. “Premiums rose across the industry, putting drivers in an impossible place. They were forced to either pay the higher cost or stop driving altogether.

“So we listened to Albertans while we were in government and introduced a five percent cap on car insurance premium increases. We thought this was a reasonable measure to protect drivers.”

–With files by Dean Bennett of The Canadian Press

Watch below: Some Global News videos about Alberta car insurance.

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