Insurance companies are expected to push for a 30% hike in auto premiums
Insurance companies are expected to push for a 30% hike in auto premiums, a potential landmine the Tories didn't see coming
By RICK BELL, SUN MEDIA
Last Updated: 29th May 2009, 2:40am
It's auto insurance rate-setting time again.
And this time, as the sums are still being finalized, the lovely folks who send you the bill for premiums are expected to push for an increase in insurance premiums in the ballpark of 30%, effective Nov. 1.
No surprise, really.
Last year, after a Calgary judge struck down the province's $4,000 cap on minor injury claims, the insurers lobbied for a jump of 37% or $225 a year on basic coverage and, though some companies suggested a lower figure, it was almost all well into the double-digit territory.
Eventually, the insurance rate board, put in their seats by the provincial government, acknowledged a 20% jump with the cap off but, in the end, granted a 5% increase, or about $30.
Now realize, any hike is only on compulsory coverage, which is a little better than half the tab.
Collision insurance rates are not set by the government and are only "monitored" by the board. So that's another hit.
So now, the cap, kiboshed in the last provincial election leaving Premier Ed with some splainin' to do, is still off and everything is in limbo awaiting an appeal.
But hearings on new rates will be held in less than three weeks and the new number for premiums is to be approved by the end of July. Not long now.
Jim Rivait of the Insurance Bureau of Canada confirms his group's final math is just about done. He's not coughing up the calculus but he does say removal of the cap leaves insurance companies with liabilities up to $400 million a year and, unless the cap is put back on after getting a clean bill of health from the courts or after the province rewrites the regulation to make the judges happy, guess who will foot the bill?
Time's up.
"I don't care what number you're talking about, it will be significant to consumers," says Rivait. "This is not the time to be a gambler. Insurers are in the business of risk. They hope for the best and plan for the worst, they don't hope for the best and then just cross their fingers."
He points to indications from the federal outfit regulating insurance companies citing "some potentially significant repercussions" since leading bean counters see Alberta insurance without a cap underpriced by 25%.
He says along with the cost of not having a $4,000 cap on minor injury claims, there are increases in other bills but higher premiums are not -- he insists -- about insurance companies losing moolah in the meltdown. "Our companies made money. Not much. It doesn't give us a whole bunch of room."
Rivait says they stuck their stash in low-risk investments and were "not big into the equity market."
Alf Savage, head honcho at the rate board and a man not known to gobble down the arithmetic of the insurance crowd, won't comment before the hearings. But it is known the feeling of some on the board leans closer to no increase or a small one, unless the companies can really make their case.
Last year, they couldn't. "We want to make sure auto insurance is a viable industry but also make sure the citizens of Alberta are protected," says Alf.
Besides, can you imagine? A whacking of Alberta drivers is quite the political headache, even for a government so confident of being untouchable they think a huge issue is whether parents should have a right enshrined in law to pull their kids out of a class on evolution. Maybe the Tories should've spent time looking out for this landmine.
Yes, remember a few years back, when people went snaky as insurance premiums smashed through the roof, along with profits?
After much agitation, Ralph's crew set up the rate board and stabilized the situation, but for a price. In exchange for rates going down some, insurers scored a $4,000 cap on minor injury claims. A learned judge nixed the cap as unconstitutional. For a second year, the insurance companies want to make up the money.
Brian (Wide Mouth) Mason, NDP No. 1 and shaker-upper of the status quo, says it's not about the cap. Insurers want us to cover their losses from gambling in the market.
"It's time we stood up as drivers. I don't think the absence of a cap is driving insurance companies to the brink of financial ruin."
Of course, the Tories also didn't look at that godless socialist public insurance.
Yes, in inexpensive Saskatchewan, they face a 4.2% hike, the first one in nine years. Manitoba is also cheaper. So much for Ralph's promise Alberta's rates would meet or beat the rest of the West.
The insurers here say it's apples and oranges because different provinces, especially ones with public plans, cover drivers differently.
Well, in Alberta, unless somebody's calculator has gone wonky, something in the neighbourhood of a 30% premium hike is the opening bid. And how do you like them apples?
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