• Wed. May 18th, 2022

Alberta auto insurers reported $1.3 billion more than they paid in 2020:

ByElla E. Kidwell

Apr 18, 2022

Alberta auto insurance providers collected more than $1 billion more than they paid out in 2020, shows a new report released by the province on Thursday.

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Alberta auto insurance providers collected more than $1 billion more than they paid out in 2020, according to a new report released last week by the province.

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The Superintendent of Insurance’s 2020 annual report shows providers collected $5.81 billion in premiums and paid $4.489 billion in claims, resulting in an overall collection of $1.321 billion. This margin is an increase from 2019 of $1.152 billion and 2018 of $974 million. Premiums and claims have increased every year for the past three years.

NDP Energy Critic Kathleen Ganley said Friday that insurance companies are earning hundreds of millions more off the backs of Alberta motorists through UCP policies. Premier Jason Kenney removed a cap on rate increases for auto insurers in 2019 after it was imposed by the previous NDP government.

“They were able to do this because the UCP removed the cap we had put in place to limit premium increases,” Ganley said. “That’s $385 million more in the pockets of Alberta drivers in just one year. No wonder the UCP tried to hide the report before we called it. No wonder they tried to bury him before a long weekend.

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The NDP accused the government of trying to suppress the superintendent’s reports for 2020 and 2021, which have been produced for more than 100 years.

Ganley said the increases came in a year when many people parked due to the pandemic and barely drove. Despite this, they still saw rate increases, she said.

“Drivers in Alberta, when you look at your car insurance bill, remember you’re getting run over by a hugely profitable company with the help of UCP,” Ganley said.

Kassandra Kitz, press secretary to Finance Minister Travis Toews, said that because much of the information in the report is publicly available elsewhere, the superintendent’s office had suspended publication of the annual document while assessing whether the report was always needed.

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“They have since taken steps to continue publishing the annual report,” Kitz said in an email.

Kitz said Albertans deserve a fair, accessible and affordable auto insurance system and that’s why the government is committed to looking at ways to improve that system. She noted that the government introduced Bill 41, the Insurance Amendment Act, which changed regulations on how premiums are calculated.

“We introduced Bill 41 in the last session which made legislative and regulatory changes to stabilize auto insurance rates, improve medical care benefits and provide more options and flexibility for drivers,” said said Kitz.

She said seven insurers had requested rate reductions in 2021 and that overall premium rates for private vehicles had fallen by just under 1% in the past 12 months.

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An analysis using data from industry and regulators ahead of the report’s release on Thursday suggested insurance companies raked in nearly $2.1 billion in profits during the COVID-19 pandemic.

An analysis by actuary Craig Allen which he says is based on figures provided by the Alberta Automobile Insurance Rate Board shows auto insurers in 2020 pocketed $928 million in pre-tax profits and $1.153 billion additional the following year.

The 2021 figure, Allen said, is based on figures available for the first half of this year and projections for the rest.

“My estimate of what the earnings will be is quite conservative, conservative,” he said. “The COVID-19 pandemic and the reduction in traffic certainly in the first half of 2021 which reduced the volume of accidents and claims is the real main driver.”

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The analysis was conducted for the Fair Alberta group, which includes lawyers, medical professionals and injured Albertans.

An insurance industry spokesperson echoed the nearly 1% rate cut cited by Kitz, adding that Allen’s numbers are incomplete and biased.

He said that did not include more than $100 million in vehicle damage claims from the June 2020 hailstorm that ravaged northeast Calgary and more vehicle traffic and likely more contingent payments. during the second half of last year.

“It’s inappropriate to take a point in time and extrapolate it to an entire year…it’s not necessarily accurate,” said Aaron Sutherland, vice president of the Insurance Bureau of Canada.

He said it was illegal for insurance company profits to exceed 7%, so “the idea that we are making a windfall is fanciful”.

With inflation nearing 6% and price increases for auto parts and used vehicles well in excess of that, “we’re seeing a lot of pressure on wallets, but car insurance isn’t one of them.

He agrees that the financial situation of many insurers has recently improved, but that some companies are doing considerably better than others.

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