Good drivers in Alberta help bad ones pay thousands less in insurance annually: report
Advocates are calling on the Government of Alberta to overhaul its auto insurance grid rating system, saying the current model is benefiting bad drivers at the expense of Albertans with good driving records.
The calls come after a report from Deloitte LLP found “some of Alberta’s worst drivers are receiving an annual auto insurance subsidy of as much as $10,000.”
Right now, Alberta is the only province in Canada that caps the premiums of high-risk drivers. That means drivers who get into more at-fault collisions are benefiting from drivers with safe driving habits, who pay higher premiums to make up the difference.
To be exact, the report found safe drivers in Alberta pay up to $180 million annually to subsidize high-risk drivers, and Alberta’s worst drivers receive an annual subsidy of $9,859.
The Insurance Bureau of Canada (IBC) says there was once a purpose to Alberta’s unique grid system but it’s no longer a viable model.
“Established in 2004, the grid was originally intended to ensure that new drivers could access an affordable premium. However, the number of drivers protected by the grid cap has grown dramatically and today, the majority are not new drivers,” the bureau states in a press release.
“Each and every day, the grid system penalizes safe drivers in Alberta by charging them higher premiums,” said Aaron Sutherland, the Pacific and Western vice president at IBC.
“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. This [is] unfair and works against the very thing the government should seek to encourage – safe driving.”
The government of Alberta told the Daily Hive the price protection cap for good drivers that was introduced back in November is currently helping to offset the negative effects of the grid system.
“The new price protection for good drivers protects them from significant rate increases while government works 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. 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 analysis will help inform the government’s decision in implementing sustainable, long-term solutions to address auto insurance affordability in Alberta.”
For more information on the good driver rate cap, you can learn more here.
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