A portion of Albertans’ auto insurance premiums will decrease by five per cent this fall, saving the average driver $30 a year.
The decrease will apply only to the mandatory portion of auto insurance, which makes up about 55 per cent of the average driver’s insurance cost, said Del Dyck, executive director of Alberta’s Automobile Insurance Rate Board (AIRB.) The average driver pays $1,100 a year for insurance so the average mandatory portion is about $600, he said. The rate decrease applies to policies renewed on or after Nov. 1.
Mandatory insurance covers third party liability and accident benefits. Optional insurance includes comprehensive and collision. This portion isn’t regulated and thus isn’t affected by the rate change.
The main reason for the decrease is the continued decrease of bodily injuries, from a peak of 12 injuries per 1,000 vehicles in 1998 to about half that rate now, Dyck said.
“Why that is it’s hard to determine,” he said. “The best information, which is anecdotal, is it’s probably due to better cars, improved safety engineering in vehicles, safer roads in Alberta and improved traffic enforcement.”
The Insurance Bureau of Canada, which is an industry association of private insurance companies, was lukewarm to the rate board’s decision. The bureau had recommended that the board hold the line on rates in an effort to balance the desire for affordable premiums along with companies’ abilities to pay claims.
“It remains to be seen whether the AIRB’s latest adjustment, which ignored the recommendations of its own actuary, will achieve that goal,” said Alberta vice-president Doug Noble in an issued statement.
In setting the rate, the AIRB took into account the industry’s input as well as data generated by its own actuary and input from a citizen representative, Dyck said.
“Our actuary is only one piece of the equation,” Dyck said.
Some media commentators suggest ratepayers won’t see any savings because the insurance industry typically increases its portion to make up the shortfall, but Dyck doesn’t see it that way.
“I’m not sure that’s a fair statement,” he said.
Optional insurance is affected by the cost of vehicle replacement and repairs, which have increased in the last number of years, he said.
“Each company deals with that on an individual basis,” he said.
