Tariffs from the ongoing U.S.-Canada trade dispute are worsening Alberta’s already strained auto insurance market, according to a new warning from the Insurance Bureau of Canada. The IBC is urging the provincial government to lift the rate cap on auto insurance, warning that continued restrictions could lead to reduced availability of coverage for drivers.A recent analysis commissioned by IBC and conducted by Deloitte found that reciprocal 25% tariffs on vehicles and parts could drive up the cost of repairs and replacements by as much as 10.9% for most insurers. These added costs, coupled with existing financial pressures, could raise premiums for Alberta drivers by as much as 5%.“Unless insurers are able to account for the impact of tariffs and other growing costs in their rates, they may be forced to further reduce the availability of coverage for drivers to remain financially viable,” said Aaron Sutherland, IBC’s vice-president for Pacific and Western regions.The IBC pointed to several tariff-related developments fueling rising costs: U.S. tariffs of 25% on Canadian steel and aluminum were implemented in March and doubled to 50% on June 3; Canada responded with 25% tariffs on vehicles not compliant with CUSMA rules; and some automakers are pausing or cancelling Canadian operations altogether, worsening parts and vehicle supply chain issues.Even before the added strain from tariffs, the province’s Auto Insurance Rate Board reported that costs were climbing beyond the rate cap. Its latest review shows bodily injury costs are expected to rise 9.1%, accident benefits by 5.5%, and vehicle damage claims by 10% over the next year.In 2024, Alberta auto insurers paid out $1.17 in claims and expenses for every $1 they earned in premiums — a trend IBC says is financially unsustainable. Alberta has had a cap on rate increases for more than three years, the longest government interference in the auto insurance market in Canadian history, according to the bureau.Sutherland said the combination of tariffs and the long-standing cap is now threatening the stability of the insurance system itself. “This situation is unsustainable, and the province must act and end the rate cap before further damage is caused,” he said.
