Alberta set to introduce DCPD in 2022

Oct. 4, 2021 —ALBERTA is set to introduce direct compensation property damage to its auto insurance system on Jan. 1, 2022. 

DCPD automatically covers auto repair bills after an accident and pays the insured directly when they are involved in a collision that is not their fault. 

It is being introduced as one of several reforms to the province’s auto insurance system that came out of advice given by the auto insurance advisory committee, which was created by the government in 2019 as part of efforts to bring down rates in the province. 

Alberta is one of the last jurisdictions in Canada to adopt DCPD, said David Mulyk, executive director of pension and insurance policy at the government of Alberta, during a virtual symposium presented recently by the Insurance Institute of Canada. 

There are two main benefits to DCPD, he said. First, consumers will find the process of making a claim simpler and more streamlined. 

Second, insurers will be better able to predict the costs of future claims. That’s because the system will include vehicle rate groups in setting premiums, which are based on the make, model and year of a vehicle along with the likelihood that type of vehicle will be in an accident. 

As a result, premiums will be priced more specifically to each driver based on their particular risks. It is expected that 42% of drivers in the province will see their rates fall as a result of the change, while 43% will see an increase. 

Roughly 15% of drivers will see no change, said Laurie Belfour, executive director of Alberta’s Automobile Insurance Rate Board. Of those seeing an increase, 33% will see increases of less than 15%, she said. 

The province is also allowing insurers to offer deductibles, which would reduce premiums but leave the driver on the hook for paying a deductible even if they are not at fault for a collision. 

Drivers would have to opt in to having a deductible and that has proven unpopular in other jurisdictions, including in Ontario where nearly all drivers choose the zero deductible option, she said. 

The Insurance Institute, along with the Insurance Bureau of Canada and the Insurance Brokers Association of Alberta, is holding a series of educational sessions to help prepare insurance industry members for the change.

 Events will be held throughout the fall, and details can be found at the Insurance Institute website. 

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