A new report from Alberta’s Superintendent of Insurance warns that the province’s auto insurance market is at risk, with financial losses for insurers and reduced competition due to government-imposed rate caps.The 2023 annual report reveals that nearly 60% of auto insurers in Alberta experienced financial losses last year as a result of the rate freeze, a policy that was extended in 2024 with a 3.7% rate cap for “good” drivers.According to the superintendent, the financial performance of Alberta’s auto insurance sector has “worsened substantially” since the rate freeze was implemented, with no improvement expected in 2024 if the cap remains in place. Operational results show an industry average of 97% — just short of breaking even — while 17 insurers reported losses exceeding 10% on personal auto policies.The Insurance Bureau of Canada (IBC) voiced concerns about the impact of these policies on Alberta’s drivers. “This new report confirms that rather than helping Albertans, the rate cap is harming the competitive market that consumers depend on,” said Aaron Sutherland, IBC’s Vice-President for the Pacific and Western region. Sutherland noted that some insurers have already exited Alberta’s market, while others have scaled back coverage options, leaving drivers with fewer choices and higher costs.The report identifies multiple cost pressures that Alberta’s insurance sector has struggled to manage within the capped rate increase. Rising costs from inflation, bodily injury claims, vehicle thefts, and climate-related damages — such as the Calgary hailstorm in August — have all contributed to market strain.Over the past two years, key cost drivers have increased dramatically:Legal costs have surged by an estimated 19%.Care and recovery benefits costs for collision victims are up by 27%.Auto theft costs have risen by 55%.The government’s health levy on insurers has increased by 60%.“Rate caps are never a sustainable solution,” said Sutherland, who emphasized that insurers are eager to work with the provincial government on reforms. He argued that addressing systemic costs is essential to improving affordability for consumers in the long term.Alberta’s insurers have put forward proposals aimed at reducing costs while enhancing care and benefits for drivers involved in collisions. These reforms, they argue, would help address affordability issues for drivers and support a more stable insurance market.
