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By Joel Mendelson

Alberta

Alberta auto insurance cost pressures among highest in Canada

Feb 7, 2024 | 7:02 PM

According to data from the General Insurance Statistical Agency (GISA), Alberta’s auto insurance system is facing some of the highest cost pressures in Canada.

It said legal fees account for a greater percentage of the auto insurance premiums that drivers pay in the province than in anywhere else in the country.

GISA data indicates that costs from litigation and legal fees are twice as high as in Ontario and over three times higher than some Atlantic provinces.

The agency also reports that Alberta was second in Canada in terms of dollars spent per claim to repair vehicles and in the frequency of vehicle thefts.

The Insurance Bureau of Canada (IBC) said these pressures will likely cause the rates in the province to rise.

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Aaron Sutherland is the vice-president of the Insurance Bureau of Canada Pacific and Western.

He said, “Alberta’s insurers are keen to work urgently with the government to tackle the cost pressures facing premiums and find ways to improve the affordability of auto insurance for drivers.”

Sutherland continued, “Unfortunately, the action taken to date – including Alberta’s rate cap for good drivers – does not address the costs underlying drivers’ coverage and will do little to improve the price drivers are paying moving forward.”

IBC says there are a variety of factors that contribute to the pressures on the province’s auto insurance premiums, including:

• Lawsuits and legal costs associated with insurance claims have soared 31 per cent in Alberta since 2018 and now account for 20 per cent of mandatory premiums.
• Bodily injury costs related to third-party liability (i.e., legal costs) will rise a projected 5% in 2024.
• Accident benefit costs will rise a projected 11% in 2024.
• Spending on vehicle parts and repairs was up 3.5% in December 2023. Over the last three years, these costs have risen 18% in Alberta.3
• The Alberta health care levy on auto premiums went up 28.2% in 2023.
• Cash settlements for minor injuries under Alberta’s Minor Injury Regulation went up 4.2% in 2023.
• More vehicles are being stolen. According to the latest data, the cost of vehicle thefts is up 39% across Alberta

The following list of ways to address affordability was compiled by IBC:

• Take urgent action to reform the auto insurance system. IBC’s “Enhancing Care & Expanding Choice” proposal gives drivers more control over their coverage, while doubling the care provided to those injured in collisions. Best of all, it could save drivers, on average, up to $200 on the required premium.
• Fix the Grid. Alberta’s Grid framework is bad public policy and charges safe drivers more to subsidize the premiums of high-risk drivers with a history of at-fault claims and infractions. The Grid works against the very thing the government seeks to encourage – safe driving. It’s time this subsidy is removed.
• Axe the insurance premium tax and provincial health levy. The government charges a hidden 4% premium tax on every auto insurance policy. Removing this tax would save drivers approximately $65 per policy. In addition, the province charges a health levy on auto insurance, adding another $30 per policy.

IBC said the measures listed above could save drivers $325 per year.