Analysis says Alberta drivers are charged abouit $700 more than necessary for auto insurance.
Premier Smith says cost of setting up public auto system that would give these savings to drivers is $3B - including reserve cash for settlements.
$3B sounds like a lot but it is only about $1000 per driver. Alberta has 2.8M insured vehicles.*
The auto insurance system harvests money - already Alberta drivers are on average paying $1587 each annually.
Altogether that is $4,443,600,000 per year -- $4B.
If Alberta government did spend $3B for auto insurance system, then In one year Alberta public auto insurance would make $1B profit, if rates stay the same.
No "cash reserve for settlement" is necessary, or at least nothing more than the already-existing Alberta government emergency funds and reserves.
Dropping insurance rates by $700 each would put system at break even, approximately. That is not repayment of the initial $3B but voters might ask, why should Alberta government make money from auto insurance, or even coverits costs?
It does not make money from highways or parks or healthcare.
Or alternatively the government could drop auto fees an average of $500 and make profit of $200 off each insured vehicle. That would be repayment of $560,000,000 each year.
In less than six years, government gets its initial outlay back while also giving drivers break in insurance fees.
And if continued at that rate (with inflation-indexed rises), the profit from auto fees would be used to cover government programs, or to pay off government debt, or to save for coming rainy day (the after-oil-ends times ahead).
$3B just sounds big - spread over about 3M people, it is not so much.
The Alberta government has made a surplus of more than $10B in a single year.
*"GISA data from 2020 shows approximately 2.8 million insured vehicles in Alberta" from Deloitte report "Albert Grid Rating", p. 19
According to the 2023 Market Report from the Alberta Auto Insurance Rate Board (AIRB), the average annual premium in 2022 was $1,587
===========================
Comments