Thursday, July 26, 2012
Mandatory automobile insurance premiums to increase by up to 5%
As a result of its annual public rate review, the Automobile Insurance Rate Board (AIRB) will permit premium levels for mandatory automobile insurance to increase by up to five per cent, effective November 1. As part of the competitive process, insurance companies have the option to implement all or part of the five per cent increase over the next three years.
Both the insurance industry and the AIRB’s actuary agreed that a double digit percentage increase was warranted, citing a boost in bodily injury frequency and property damage collisions. These reasons, combined with a decrease in the revenue generated by investments made on premium income, were the key factors creating a need for an increase.
“We knew that an increase would be necessary, but we wanted to take a more measured approach in order to maintain balance in the system,” said Alfred Savage, AIRB chair. “A five per cent increase, which works out on average to $30 per year, reflects current insurance trends while still keeping premiums at a reasonable level.”
Since 2004, the AIRB has reduced the mandatory portion of premiums by 18 per cent overall, and it will be closely monitoring the effects of this year’s increase. This is the first increase since 2008.
The decision applies only to mandatory coverage, which is required by law and includes third party liability and accident benefits coverage. It does not include optional collision or comprehensive coverage. Those premiums are set by individual insurance companies and monitored by the board.
The AIRB works to maintain an efficient and effective automobile insurance market with rates that are predictable and fair for both motorists and insurance companies. The board is required to review auto insurance rates every year. This year’s meeting was held in Calgary on June 12. Copies of the submissions received from stakeholders can be found on the board’s website.
For more information, visit the AIRB’s website at www.airb.alberta.ca or call 780-427-5428 (toll-free at 310 0000).