New government report shows Alberta's auto insurance market in peril

Superintendent of Insurance confirms government's rate interference making matters worse

EDMONTON, AB, Nov. 4, 2024 /CNW/ - Alberta's auto insurance market continues to deteriorate, according to the government regulator that oversees the province's insurance companies.

In its newly released annual report, the Alberta Superintendent of Insurance noted that in 2023 – the year the province froze auto insurance rates – roughly 60% of insurers that sold personal auto insurance (24 carriers) suffered a financial loss. According to the report, "automobile insurance results worsened substantially from 2022 to 2023" under the government's rate freeze and, "the Superintendent expects this worsening trend in automobile insurance to continue through 2024" under the current rate cap.

"Drivers are feeling the negative impact of two years of government price controls in the auto insurance market. This new report confirms that rather than helping Albertans, the rate cap is harming the competitive market that consumers depend on," said Aaron Sutherland, Vice-President, Pacific and Western, Insurance Bureau of Canada. "A number of companies have left the auto insurance market in Alberta and others have been forced to reduce the coverage they sell to consumers in an effort to stay financially viable. This turmoil has diminished competition and choice for drivers, with many being forced to pay more for coverage as a result."

The Superintendent of Insurance's annual report also shows that:

• Operational results for auto insurers deteriorated to 97% in 2023 (100% is the break-even point).
• Of the companies that lost money, 17 lost more than 10% on the sale of auto insurance.
• The rate cap coupled with increasing pressure on claims costs – due to factors such as inflation, growth in severe bodily injury claims, vehicle theft rates and weather-related losses like the August 5, 2024, Calgary hailstorm – continues to put pressure on the profitability and stability of automobile insurance in Alberta.

"Rate caps are never a sustainable solution. Unless the rate cap is immediately removed, consumer challenges in the auto insurance market are likely to grow," continued Sutherland. "Only action to address the cost pressures in the system, including legal costs, can improve affordability for drivers. Alberta's insurers are keen to work with the government to make meaningful action a reality."

Alberta's insurers have proposed reforms that will help address costs and deliver immediate and long-term relief to drivers. These reforms will improve affordability while enhancing the care and benefits available to those injured in a collision. To learn more, visit www.betterwaytosave.ca.

Background

In 2023, the Alberta government froze auto insurance rate filings. It followed that policy in 2024 with a 3.7% rate cap for "good" drivers. The government's definition of "good" drivers captures roughly three-quarters of Albertans. 

Alberta's auto insurance system is facing significant costs, all of which are growing well in excess of the government's 3.7% rate cap and must be addressed to improve affordability for drivers. Over the past two years:

• Legal costs have grown a projected 19%
• The cost of delivering care and recovery benefits to those injured in a collision is up about 27%
• The cost of new and used replacement vehicles has grown 27% and 9%, respectively
• The cost of auto theft is up 55%
• The Alberta government's health levy on auto insurers is up a staggering 60%.

About Insurance Bureau of Canada

Established in 1964, Insurance Bureau of Canada (IBC) is the national industry association representing Canada's private home, auto and business insurers. Its member companies make up the vast majority of Canada's highly competitive property and casualty (P&C) insurance market.

As the leading advocate for Canada's private P&C insurers, IBC collaborates with governments, regulators and stakeholders to support a competitive environment for the P&C insurance industry to continue to help protect Canadians from the risks of today and tomorrow.

IBC believes that Canadians value and deserve a responsive and resilient private P&C insurance industry that provides insurance solutions to both individuals and businesses.

For media releases, IN Focus articles or to book an interview with an IBC representative, visit ibc.ca. Follow us on LinkedIn, X and Instagram, and like us on Facebook. If you have a question about home, auto or business insurance, contact IBC's Consumer Information Centre at 1-844-2ask-IBC. We're here to help.

SOURCE Insurance Bureau of Canada

Media Contact: Brett Weltman, Manager, Media Relations, IBC, [email protected]