Alta. insurers forced out of business, offer reduced coverage under rate caps, report says

A new report says Alberta's cap on insurance rates is putting insurers out of business and costing drivers more for less coverage. (Pexels)

When the Alberta government froze auto insurance rates in 2023, 60 per cent of insurers in Alberta suffered a significant financial loss, new data shows.

The report, from the Alberta Superintendent of Insurance and shared by the Insurance Bureau of Canada (IBC), is highlighting the problems created by the province's cap on rates and suggests that if it isn't lifted, the challenges could continue.

"Rather than helping Albertans, the rate cap is harming the competitive market that consumers depend on," said Aaron Sutherland, IBC's Pacific and Western vice-president, in a news release.

Sutherland says the cap has also forced many companies out of business while others have reduced the coverage they offer to customers.

"This turmoil has diminished competition and choice for drivers, with many being forced to pay more for coverage as a result," Sutherland said.

After the government capped rates in 2023, it also capped the rate for "good" drivers at 3.7 per cent in 2024.

IBC says "good" drivers make up approximately three-quarters of Albertans.

The organization says costs are outgrowing the cap:

"Only action to address the cost pressures in the system, including legal costs, can improve affordability for drivers," Sutherland said.

"Alberta's insurers are keen to work with the government to make meaningful action a reality."

More details on Alberta's rate cap and its impact on your insurance premiums can be found online.