The Insurance Bureau of Canada (IBC), reporting on the latest figures available from the General Insurance Statistical Agency (GISA), a statistical agency created and overseen by provincial insurance regulators, says Alberta’s auto insurance system is facing some of the highest cost pressures in the country.
“Legal costs now account for a greater portion of the auto insurance premiums drivers pay in Alberta than anywhere else in Canada. Costs from litigation and legal fees are twice as high as Ontario, and over three times as in some Atlantic provinces,” the IBC writes in a statement highlighting the findings.
Notably, they say lawsuits and legal costs associated with insurance claims have increased 31 per cent since 2018 and now account for 20 per cent of mandatory premiums. As well, bodily injury costs, accident benefit costs, cash settlements for minor injuries and spending on vehicle costs and repairs were all up in 2023.
The IBC also called out the province’s health care levy on auto insurance premiums, which they say increased 28.2 per cent in 2023. “The government charges a hidden four per cent 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,” they write.
Alberta ranked second in Canada for the amount spent per claim to repair vehicles and similarly ranked for the frequency with which vehicles are stolen in the province. The cost of vehicle thefts, they say, is up 39 per cent in the province. “With auto insurance premiums already among the highest in the country, rates in Alberta are likely to rise if these pressures are not urgently addressed.”
The IBC adds that insurers are keenly interested in working with the government to tackle the costs identified. “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,” says Aaron Sutherland, vice president with the IBC.