60% of Alberta Auto Insurers Face Financial Loss Amid Rate Caps

Alberta's auto insurance market is deteriorating, with the 2023 government-mandated rate freeze significantly impacting insurers. According to a newly released report by the Alberta Superintendent of Insurance, about 60% of personal auto insurance carriers reported financial losses during 2023. The Superintendent warned that this negative trend is expected to continue into 2024 under the current rate cap. The operational results of auto insurers fell to 97% in 2023, approaching unsustainable levels as claims costs rise due to inflation, severe bodily injury claims, and increased vehicle thefts. Notably, the August 2024 Calgary hailstorm has added further financial pressure on the market. Companies are grappling with rising legal costs, which are projected to increase by 19%, and a significant spike in the health levy imposed by the Alberta government. Additionally, some insurers have exited the Alberta market entirely, while others have had to reduce the coverage available to consumers to remain viable. This situation points to diminished competition and choice for drivers. Experts have warned that the rate caps introduced to ostensibly help consumers are likely exacerbating issues within the market. Insurance Bureau of Canada representatives emphasize that sustainable solutions will require addressing the underlying costs rather than relying on rate caps to manage affordability.