As Alberta prepares to make sweeping changes to fix its flailing auto insurance system, experts say extreme weather remains the wild card.
Nadja Dreff, senior vice-president and sector lead for global insurance and pension ratings with Morningstar DBRS, said the reforms announced Thursday by the Alberta government are a positive move for what has been an increasingly unprofitable market for insurers.
But she said it is unclear whether the government’s decision to allow rate hikes of up to 7.5 per cent per year, compared with a previously allowed cap of 3.7 per cent, will be enough to stabilize the insurance industry in the province.
“What none of us really know is the component of claims that will come from natural catastrophes,” Dreff said.
“And unfortunately, we have a very good example from the last quarter. Q3 was particularly bad in Alberta, in particular in the auto industry, because of a hail event.”
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