Insurance Bureau of Canada: ‘Good Drivers’ Pay Higher Alberta Car Insurance Premiums

The Insurance Bureau of Canada (IBC) released a report highlighting a concerning trend in Alberta car insurance premiums. According to the report, insurance companies burden “good” drivers in the province with higher auto insurance premiums to subsidize high-risk drivers’ insurance. This situation raises important questions about fairness and equity within the insurance system.

How it works: Alberta car insurance premiums

Insurance companies typically determine premiums based on factors including a driver’s age, driving record, and the type of vehicle they own. Higher premiums are assigned to statistically higher-risk drivers to cover the associated costs of accidents and claims.

The grid rating system in Alberta determines the premiums that drivers have to pay for mandatory coverage. The system assigns points (-15 to +15 and above) to determine premium levels set by Automobile Insurance Rate Board (AIRB) and individual insurers. High-risk drivers are offered a cap on their premiums, meaning they don’t have to pay the full amount based on their risk level.

Alberta car insurance premiums
Alberta’s grid rating system is unique in Canada in that it caps the premiums of high-risk drivers. This means no matter how many at-fault collisions or infractions they have, high-risk drivers will never pay more than a set maximum amount.

IBC says ‘good drivers’ pay more

A Deloitte LLP report examined data from seven insurers in Alberta. They found that drivers with at-fault claims and infractions receive subsidized insurance rates, thanks to the grid system. On the other hand, responsible drivers pay more to make up for the difference.

The report estimates that safe drivers in Alberta are collectively paying $180 million in premiums. These funds are used to subsidize the premiums of high-risk drivers. Shockingly, the worst drivers in the province are receiving average annual subsidies of $9,859!

The IBC argues that this system is unjust and undermines the goal of promoting safe driving. To address this issue, it recommends removing the grid system altogether or making substantial reforms to ensure it benefits the drivers.

If you want to learn more about this topic, you can read the full report by clicking here. It’s essential to stay informed about the state of our auto insurance system and advocate for fair practices that encourage safe driving for everyone.

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