The recent decision by a major insurance carrier to withdraw from the personal auto insurance market in Alberta has sent shockwaves through the province, with one trade association warning of a potential domino effect.
A statement from the Insurance Brokers Association of Alberta (IBAA) pointed to previous warnings it had made about the potential consequences of rate pauses. It said remaining insurers face mounting pressure to handle demand and ensure adequate coverage for drivers.
“This could cause a domino effect within the industry if we do not see meaningful reforms in the personal auto insurance sector very soon,” the association said.
Previous reports revealed that the company pulling out of the Alberta market will leave as many as 16,000 drivers without coverage.
IBAA called on the Alberta government to look at “lasting reforms” to alleviate insurance costs without the need for rate pauses.
One suggestion is the suspension of provincial tax on insurance premiums for personal auto insurance, which IBAA said would result in an “immediate premium reduction for all Alberta drivers while long-term solutions are implemented.”
The association also suggested regulatory changes that would grant drivers more freedom in choosing how they purchase insurance, with options to select a limited right to sue for minor injuries, while still maintaining the right to sue for major injury.
Another recommendation is a risk-based pricing model that would ensure good drivers are not strapped with the responsibility of subsidizing risky ones.
In its statement, IBAA also echoed Alberta finance minister Nate Horner’s previous comments regarding his reluctance to implement a complete no-fault system in the province, stating that such a move would not be beneficial to Albertans.
“There is an urgent need for meaningful change to the current system,” the association said. “We hope to continue to work with the finance minister’s office, the Insurance Bureau of Canada, and the insurance carriers operating in Alberta, to enact sustainable changes to our auto insurance system that will see long lasting benefits to the consumers of Alberta while maintaining a strong competitive marketplace that meets the needs of our drivers.”
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