Time for a New Year’s Auto Insurance Premium Haircut?
Insurance lobbyists who had deftly gerbilled their way into Jason Kenney’s inner sanctum enjoyed great success during his brief reign as Premier of Alberta, first easily convincing the Kenney-led UCP to lift the lid on the rates insurers could charge Alberta motorists, and then drafting tort deforms which were swiftly and obediently enacted by Kenney’s loyal rookie finance minister Travis Toews. Those tort deforms, a direct attack on innocent Albertans injured by reckless drivers, were predicted by insurance lobbyists to save the insurance industry a quarter of a billion dollars per year in claims costs. As a result of these government gifts to the auto insurance industry, good Alberta drivers pay inflated insurance premiums while insurers reap what the Auto Insurance Rate Board (AIRB) described in its 2022 Annual Review Report as “unprecedented profit levels.”
However, there’s a new sheriff in town, as last year Danielle Smith edged out insurance industry benefactor Travis Toews in the race to replace Kenney as UCP leader and Premier of Alberta. While Toews remains finance minister, insurance lobbyists have reason to be concerned that Premier Smith will be less likely than Kenney to let Toews keep doling out goodies to insurance lobbyists on demand. Prior to entering the UCP leadership race, Danielle Smith was a media personality. In a column in the Calgary Herald several years ago, Smith wrote, “If insurance reform is going to work for regular Albertans, preserving the rights and interests of victims must be the starting point.” In our firm’s view, it is refreshing that Alberta in 2023 might actually have a Premier more concerned with the rights of ordinary Albertans than with the plump bottom lines of highly profitable, multi-billion dollar multi-national automobile insurance corporations. What can our provincial government do to afford Alberta motorists some relief from over-inflated insurance rates? An opposition MLA’s private member’s bill to freeze auto insurance rates for a year made it to first reading last month, so that’s one idea. Here’s another: the AIRB has established 7% of the premium as a target underwriting profit provision for insurance coverage, pretty rich considering that when the insurance lobby was begging the government for a so-called “minor” injury regulation slashing pain and suffering compensation payable by insurers to injured Albertans (back when Danielle Smith penned that column quoted above), the insurance industry wasn’t even seeking an underwriting profit -- its stated “Perfect World” goal was to have premiums match claims costs and operating expenses, leaving its massive investment income as pure, sweet profit. With an election mere months away, Toews could show Albertans that he and the UCP government won’t get fooled again by the insurance lobby, and instead will protect Albertans by ordering the AIRB to reduce the underwriting profit provision to 0%.