Automobile Insurance Regulation in Alberta - For Drivers

Who regulates automobile insurance in Alberta?

The Automobile Insurance Rate Board (AIRB) regulates automobile insurance rates in Alberta, in accordance with the authority granted by the Insurance Act and regulations. The AIRB has authority to approve, reject or require changes to Alberta automobile insurer premium rating program filings. The AIRB reviews and approves rating programs for insurers selling automobile insurance to Albertans for all vehicle types: Private Passenger, Commercial & interurban (non fleet), Off-Road, Antique, Collector, Buses (Public, Private, School & Hotel), Ambulances, Campers & Trailers, Farm, Public, and Taxi & Limousines.

How does the AIRB address market challenges?

The AIRB monitors the automobile insurance market, including but not limited to, loss trends, availability, affordability, technological advancements and innovation to benefit consumers, and consumer perceptions.

The AIRB discusses these topics with stakeholders, and industry experts to stay informed and proactively regulate the automobile insurance industry. The AIRB uses its understanding of the changes in the market to advise insurers prior to the development of a rate filing and in its decision making process for approval, revision or denial of rate requests.

In recent years, automobile insurance in Alberta has been challenging. Through legislative amendments made in the fall of 2020, the Government took steps to address the cost pressures which were increasing premiums for Albertans. The AIRB shares consumer concerns for the affordability of insurance and expects all insurers filing rating programs to reflect the impact of the product reforms as well as any other impacts, such as COVID-19.

During the pandemic, the AIRB actively advocated for Albertans asking insurers to provide relief in the premiums. The industry responded with rebates, premium increase deferrals, or reducing rate change impacts. The AIRB considers the unique circumstances of each insurer while maintaining a broader view to the best interests of Albertans. We recognize many insurers saw a significant decrease in their loss costs during the pandemic, however not all did. Some insurers who did find relief during reduced mobility, experienced high losses due to hail and other weather related catastrophes.

What is a rating program?

A rating program is a complex formula used by insurers to determine the amount of premium to be charge to insure a risk (vehicle). Rating programs include a number of rating variables or factors which identify levels of risk. Rating variables are the criteria an insurer uses in determining the insurance premium for a driver. Examples of rating factors include where you live (territory), claims, driving convictions, age and use of vehicle. The AIRB has the authority to prohibit the use of a rating variable when it believes the rating variable is not fair to consumers.

How does the AIRB review rating programs?

The AIRB has filing guidelines used to determine the type of review to be conducted. The filing guidelines are based on the nature and magnitude of the change to the rating program being requested.

The AIRB staff scrutinize all aspects of each rate filing. All rating variables, discounts, and surcharges are reviewed to ensure in line with AIRB filing guidance, expectations and the law. AIRB staff will require the insurer to resubmit all or portions of their filing if there are any concerns with any component. The AIRB contracts with a consulting actuary to conduct actuarial analysis and fully vet all rate indications. An insurer will not be approved for a rate change greater than their rate indication.

Another aspect of a rate filing the AIRB scrutinizes is the consumer impact. The AIRB reviews the impact of each rate filing by the percentage impact as well as the dollar impact to all consumers in their book of business. If an insurer’s filing has a high consumer impact, the AIRB can require the insurer take steps to minimize it. The AIRB expects insurers to consider the consumer’s impact of their business decisions, and to adequately communicate all changes.

To reference recent rate approvals, implemented by insurers, please refer to our Approved Automobile Insurance Rate Board Filings web page. The most recent 12 month average rate change is under the heading "Weighted Average of Approved Rate Changes". The average rate change is updated every month.

Rate changes are approved on an insurer's overall business and individual policyholders may see rate changes different than the average, based on their unique circumstances such as where they live, vehicle they drive, and driving record.

The independence of the AIRB's consulting actuary

The AIRB contracts with Oliver, Wyman Limited to perform consulting actuarial work. The consultant has been selected because they do not perform actuarial services for individual insurers in Canada. The consultant is independent of industry stakeholders, focusing their automobile insurance work on assisting regulators.

Actuarial science is based on assumptions and choice of rate making technique. Actuaries use their judgement to assess the reasonableness of a rate indication. Oliver Wyman’s independence from the industry ensures they remain unbiased in their review insurer rate filings and analysis of industry data to develop industry benchmarks.