Albertans are facing rising auto insurance premiums because of inflation, severe weather and legal claims, but it is unclear if the Government of Alberta's planned 2027 shift to a "care-first" system will ease costs for drivers.
Heather Mack, policy and communications advisor with the Automobile Insurance Rate Board (AIRB), said the costs of delivering insurance have been rising for several years, particularly in physical damage claims. She said inflation for parts, service delays, and rental vehicle costs are driving up premiums. Bodily injury claims, including lawsuits for pain and suffering, are also contributing to higher costs.
“So basically, what happens if you have a collision and it’s more than a minor injury, you can sue the at-fault person, and the awards are just going up and up, and we’re seeing more of that, and that’s driving the cost of insurance,” Mack said.
She said insurers are losing money on many policies.
“For every dollar that they take in on premiums, they spend 97 cents on claims, and then on top of that would be another 27 cents, roughly, that goes to their operating costs,” she said.
Mack noted insurance rates can also vary by location. Postal codes affect premiums, as insurers consider factors such as hail risk and theft rates. She encouraged drivers to explore options to reduce costs, which include shopping around at different companies.
St. Albert resident Darcy Dalke said in an email to the St. Albert Gazette his wife, a responsible driver with no accidents or tickets, has seen her premiums rise because her vehicle is statistically more likely to be involved in collisions. He also raised concerns about in-vehicle monitoring systems, which insurers promote as a way to lower rates.
“One hard brake to avoid a collision, and suddenly your ‘safe driver’ status is gone and your premiums spike," he said. "It feels invasive and unreliable."
Starting in 2027, the province announced it will introduce a “care first” system. Mack said accident benefits will shift from a capped amount to lifetime coverage for medical and rehabilitation needs. This change is intended to reduce the need for lawsuits, which currently contribute to rising premiums.
Aaron Sutherland, vice-president of the Insurance Bureau of Canada, said Alberta’s extreme weather, such as hailstorms, and longstanding rate cap, has affected insurers’ ability to operate.
“While capping rates sounds like a good thing, what it has ultimately done is forced auto insurers to leave Alberta," he said. "It has forced other insurers to suspend the sale of coverage because it is no longer viable for them."
He added drivers may end up paying higher premiums when forced to switch to a different insurer because their current company can no longer sell coverage.
Sutherland also cited inflation, rising costs for vehicle parts, and international tariffs on steel and aluminum as contributing factors.
“One-third of all new vehicles are subject to tariffs, and that’s driving up the cost of replacing vehicles,” he said.
He said the structure of Alberta’s system, which sets coverage requirements by government mandate, means insurers mainly compete on price, so even modest increases in costs can quickly affect premiums.
He thinks consumers will need to wait and see what changes the province's new policy, coming into effect in 2027, will make, but it doesn’t appear that the new policy will drive down costs.
“Reforms are coming in 2027," Sutherland said. "They will improve the quality and the benefits that you receive if you're injured in a collision ... The big question is, will it improve the price you're paying? And I think it's increasingly looking like 'no.' Some drivers may, in fact, see rate increases.”
Dalke believes removing the cap is the wrong approach.
“Alberta’s decision to remove the cap on auto insurance has allowed companies to recover costs from these disasters, but it has left consumers footing the bill,” he said. “We need to advocate for those caps to be reinstated, so that insurance remains fair and affordable for everyone.”
