Who Regulates Auto Insurance in Alberta?

The Automobile Insurance Rate Board (AIRB) regulates auto insurance rates in Alberta under the authority granted by the Insurance Act and regulations. The AIRB approves, rejects, or requires changes to Alberta auto insurance rate filings for all vehicle types.

How Does the AIRB Address Market Challenges?

The AIRB works in the best interest of Albertans while considering each insurance company’s circumstances. It ensures a competitive marketplace, as well as accessible, equitable, and sustainable auto insurance for Albertans.

The AIRB monitors many aspects of the auto insurance market like driver perceptions, loss trends, availability, affordability, technological advancements, and innovations benefiting Albertans. It also discusses these topics with stakeholders and industry experts to stay informed and proactively regulate the auto insurance industry.

With this input and an understanding of past market trends, the AIRB advises insurance companies on their rate requests before they are submitted while also keeping them informed about the decision-making process for approval, revision, or denial of these requests.

In recent years, the AIRB has noticed Albertans are concerned about the affordability and complexity of their auto insurance rates. The rate board has been regularly surveying drivers and hearing from industry stakeholders to ensure auto insurance is accessible to all Albertans.

What is a Rating Program?

Insurance companies use a complex formula to create a rating program that can determine the cost of insuring a vehicle’s identified risks.

Learn more about how insurance rating programs are calculated.

The AIRB has the authority to prohibit the use of a rating variable when it is seen to be unfair to drivers.

How does the AIRB Review Rating Programs?

The AIRB staff reviews changes to rating programs according to its filing guidelines, and based on the nature and magnitude of the requested changes made by an insurance company. They examine the variables of each filing to ensure they align with the filing guidelines, expectations, and law.

The AIRB staff may require an insurance company to resubmit a portion or all of their rate filing if any aspect raises concerns. The AIRB also contracts with a consulting actuary to conduct analyses and review all rate changes thoroughly. The AIRB will not approve an insurance company’s rate change if it exceeds its rate indication.

Another aspect of a rate filing that the AIRB examines is the impact on Albertans. The AIRB reviews the effect of an insurance company’s rate filing, considering the percentage and dollar impact on all their policyholders. 

The AIRB expects insurance companies to consider the impact of their business decisions on policyholder and to communicate all changes adequately. If an insurance company’s rate filing has a high impact on its policyholders, the AIRB can require the company to take steps to minimize the effect. 

The AIRB approves rate changes for an insurer’s overall business. Based on an individual policyholder’s unique circumstances, rate changes may differ from the overall average.

See the most recent rate approvals and the 12-month average of rate changes. 

The Independence of the AIRB's Consulting Actuary

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

Actuarial science is based on assumptions and rate-making technique. Actuaries use their judgement to assess the reasonableness of a rate indication. Oliver, Wyman Limited’s independence from the industry ensures they remain unbiased when reviewing insurance companies’ rate filings and analyzing industry data to develop industry benchmarks.

What does Principles Based Regulation mean to the AIRB?

The AIRB strives to be principles-based when appropriate; this enables flexibility to treat each insurer individually while being fair and equitable. This means we promote use of high-level, broadly stated principles rather than detailed, prescriptive rules where practical to do so. We believe this approach encourages innovation and provides the flexibility for insurers to adopt new strategies for pricing auto insurance for Alberta drivers while enabling the AIRB’s receipt of the evidence and information needed to make informed decisions.

The AIRB focuses on the outcomes of its decisions and believes a principles-based approach ensures attention is paid to the premium impacts rather than requiring insurers to follow prescriptive processes which do not lead to better outcomes for Alberta drivers and their auto insurance premiums.

We implemented a principles-based approach in our filing guidance in 2021 and continue to do so as new or updated guidance is warranted. We strive to be transparent in what principles-based regulation means in the context of our work and have outlined our regulatory approach and expectations for insurers.