The Alberta government’s auto insurance price control policies, such as the current rate cap and the provincial grid system, may be doing more harm than good for drivers in the province, according to Jack Mintz, President’s Fellow of the School of Public Policy at the University of Calgary.
In his report, Alberta’s Vehicle Insurance Options, Mintz argues that freezing insurance premiums, even temporarily, could result in future premium spikes.
“The grid used by Alberta includes various price caps to protect certain drivers from higher insurance premiums, but this comes at the expense of other drivers who have to bear higher premiums. Both the rate cap and grid should be abolished immediately,” he said.
In 2023, the Alberta government froze auto insurance rate filings, followed by a 3.7% rate cap for “good drivers” in 2024. The grid system similarly caps rates for high-risk drivers, causing those with safer driving records to pay more to subsidize capped premiums.
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Mintz’s report outlines several cost increases in Alberta’s auto insurance system that exceed the 3.7% rate cap. Over the past two years, legal costs have increased by 19%, while care and recovery benefits for collision victims have risen by 27%. The cost of replacement vehicles has also gone up, with new vehicles increasing by 27% and used vehicles by 9%. Auto theft costs have surged by 55%, and the government’s health levy on auto insurers has jumped by 60%.
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Mintz suggests that the rising costs in Alberta’s insurance system reflect a need for reforms focused on economic efficiency, fairness, and financial stability—principles he believes the current policies are undermining.
The Insurance Bureau of Canada (IBC) echoed some of Mintz’s concerns. Aaron Sutherland, vice-president of IBC, pointed to nearly a decade of government intervention in the Alberta insurance market as a factor that has exacerbated cost pressures driving up premiums.
“Nearly a decade of government intervention in the Alberta insurance market has compounded the underlying cost pressures that are driving up premiums. Only meaningful reform to address growing cost pressures will pave the road to a better outcome for consumers,” said Sutherland.
Mintz’s report also advocates for a more open and competitive market, which he believes would lead to better pricing and service for insurance customers.
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