Albertans continue to pay high prices for auto and home insurance and soon, there will be fewer companies to choose from.
According to a press release from Aviva the company plans to discontinue auto and home insurance coverage for Albertans by January 2025 while Sonnet says it will stop issuing new or renewed auto insurance policies starting Dec. 13, 2024.
“We want to continue to offer Albertans choice and affordable auto insurance. But auto insurance in Alberta has not been profitable for many years,” said Susan Penwarden, Managing Director of Personal Lines, Aviva Canada.
Sonnet will continue to focus its efforts to profitably grow its auto insurance business in other regions in Canada,” said Paul MacDonald, Executive Vice-President, Personal Insurance & Digital Channels with Sonnet.
According to MoneySense, in 2022, Alberta's average yearly auto insurance premium was $1,587. In comparison, British Columbia’s average was $1,411 that year and Saskatchewan's was $1,347.
Despite the United Conservative government capping insurance rate hikes at 3.7 per cent in January and a rate pause restricting insurers from filing for any new increases in 2023, insurance holders still feel the pinch.
“These actions do more harm than good and push today’s challenges down the road. Meanwhile, cost pressures continue to grow, and insurers are unable to take rates needed to keep pace,” said Vice-President of Pacific and Western for the Insurance Bureau of Canada (IBC).
“Companies are being forced to scale back their offerings to remain viable. Some are being forced out of the market entirely. This is making it more difficult for many Albertans to secure the coverage they need.”
The IBC said that before the government’s caps and rate pauses, 17 insurers were losing money on the sale of auto insurance. In the first quarter of 2024, Alberta’s private passenger auto insurers paid out more in claims and direct expenses than they earned in revenue – losing an average of 10 cents for every $1 of revenue.
In December of 2022, the Alberta NDP introduced the Insurance (Private Passenger Vehicle Premium) Amendment Act that would suspend the authority of the auto insurance rate board to approve rate increases and the authority of the Finance Minister to direct the rate board to approve any increases for a year.
That plan was eventually criticized by the Insurance Brokers Association of Alberta (IBAA).
“Rate caps simply don't work,” said IBAA President Barry Haggis. “They do nothing to reduce costs within Alberta's insurance system, and simply push problems down the road while making it difficult for many drivers to obtain the coverage they need.”
From April 26 to June 26 this year, the Alberta government consulted with residents about auto insurance. The results of those consultations are still under review and will inform new legislation to reform auto insurance, which could take place this fall.