Limit on auto insurance hikes for 'good drivers' kicking in too late for some Albertans

The provincial government's 3.7 per cent cap on auto insurance rate increases for Albertans deemed "good drivers" — announced last fall — was touted as a measure to help drivers with costs in the short-term as it works toward long-term reforms.

But some eligible drivers have noticed that the cap isn't kicking in for them until 2025, and they're still seeing increases way above 3.7 per cent this year.

Calgarian Prabin Joshi was recently informed by his insurance company that he qualifies as a good driver under the program, but the cap doesn't apply until his next increase — next January.

His premium increased by $500 this year, up 18.5 per cent from last year.

"I don't have any driving convictions, but still, I'm paying more and more each year," said Joshi.

He says that's a problem, especially when the province hasn't said how long the program will last, or whether it'll get rid of it once reforms are made.

"Let's say the government announces any new changes to that policy, then it's no use for me. So that's kind of sad for me," he said.

Delays are dependent on when insurance companies file their rate changes, explained Insurance Bureau of Canada vice-president Aaron Sutherland.

Although the program took effect in January, some companies — including some of the province's largest insurers — didn't file their rates until this month. It can take up to a year for those changes to be seen on drivers' premiums, he said.

"If you've just renewed and your auto insurance company hasn't filed rates quite yet, you're not going to see the impact of the good driver rates cap until a year from now," said Sutherland.

Alberta drivers pay the second-highest insurance premiums in the country.

'Bad' drivers to see 13% average price jump

The program has been criticized in the past. 

Alberta NDP Opposition house leader Christina Gray told reporters last fall that the definition of a "good driver" is too narrow.

As a reminder, a "bad" driver includes those who: 

• Had one or more at-fault crashes in the last six years.
• Had a Criminal Code traffic conviction during the last four years, such as impaired driving.
• Had a major traffic conviction during the last three years, including distracted driving or speeding in a school zone.
• Had a minor traffic conviction in the last three years, such as failure to stop or following too close.

Sutherland says it's too easy to fall outside of the scope of a "good driver" — you can even lose the rate cap if you move or get a new car.

"[There are] significant rate pressures flowing through the system right now … like legal fees following claims, inflation in vehicle repair costs, rising levels of theft," said Sutherland.

"All of these are putting a lot of pressure on auto insurance rates in the province and with insurers unable to address those for most of their customers, it means if you fall outside the definition of a good driver, you are likely to see higher rate increases as a result."

The province says nearly 75 per cent of Alberta drivers qualify for the cap under the program.

Alberta's Automobile Insurance Rate Board, an independent agency responsible for regulating auto insurance, uploads all insurers' rate filings online.

According to figures from insurance companies that have filed their rate increases this year, the average premium increase for the remaining quarter of Alberta drivers is around 13 per cent.

The senior press secretary for Nate Horner, Alberta's minister of treasury board and finance, told CBC News in a statement that there are measures in place for the rest of the province's drivers.

"To protect good drivers who do not qualify as a good driver, the AIRB advised insurers that they will not approve a rate change greater than 10 per cent overall," wrote Justin Brattinga in an email.

However, that doesn't mean "bad" drivers will see their increases capped at 10 per cent. It simply means "the overall total combined impact across all Alberta drivers is no more than 10 per cent," said Brattinga.

The province has hinted that a potential overhaul of Alberta's auto insurance system could come as early as this fall.

Brattinga says once reforms are made, the province will revisit whether the cap for good drivers is necessary.