The Alberta Superintendent of Insurance has published its annual report for 2023, which the Insurance Bureau of Canada (IBC) sees as confirmation of how the rate cap in the province is negatively impacting the auto insurance market.
“Overall, in 2023 Alberta’s automobile insurance operational result deteriorated by nine points from approximately 88 to 97%,” reads part of the regulator’s report. “This means that, on average, Alberta’s automobile insurers made about 3% underwriting (operational) profit in 2023.
“While there was overall profitability, the Superintendent estimates that roughly one-third of the 67 automobile insurers that wrote Alberta business in 2023 lost money on Alberta automobile insurance.
“Of those 67, for the 40 that wrote private passenger automobile insurance (27 only wrote commercial or miscellaneous automobile insurance), the results were even worse with three-fifths being unprofitable.”
In response, IBC pointed out that it was in 2023 that the provincial government froze auto insurance rates in Alberta.
Commenting on the report, IBC Western and Pacific vice president Aaron Sutherland (pictured) said: “Drivers are feeling the negative impact of two years of government price controls in the auto insurance market. This new report confirms that rather than helping Albertans, the rate cap is harming the competitive market that consumers depend on.
“A number of companies have left the auto insurance market in Alberta and others have been forced to reduce the coverage they sell to consumers in an effort to stay financially viable. This turmoil has diminished competition and choice for drivers, with many being forced to pay more for coverage as a result.”
Among those who have decided to leave Alberta’s auto insurance market is Definity-owned brand Sonnet Insurance Company.
“Limited opportunities for Sonnet to grow profitably in the current auto insurance operating environment in Alberta were a key consideration in making this decision,” the company said in June after conducting a thorough review of its prospects in the province.
Similarly, Aviva Canada previously announced that its direct-to-consumer business would cease offering home and auto insurance in Alberta due to the province’s growth-limiting environment.
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