The Insurance Brokers Association of Alberta (IBAA), and more recently researchers from the C.D. Howe Institute have joined other voices calling for the removal of the province’s premium rate cap for good drivers. IBAA says more and more Alberta drivers are finding themselves unable to secure the coverage they need in the province as a result of the policy. 

“With the rate cap now in its third year, auto insurers have increasingly scaled back or terminated coverages, making it difficult for many drivers to secure the insurance they need. This leaves them dangerously underinsured and forced to pay out-of-pocket when an accident occurs,” the association stated in a recent release. “Though the intention of the rate cap is to ease the cost burden for good drivers, the system isn’t working.” 

Curtailing coverage 

They add that as insurers curtail the level of coverage they offer, owners leasing vehicles with contractual obligations to maintain certain coverages, are increasingly unable to secure the collision and comprehensive coverages required in their lease contracts. Drivers whose insurers have left the province were also left vulnerable, particularly those with a history of claims or road-side infractions.

This history of claims can include claims for damages incurred in last year’s hail storms in Calgary and wildfires in Jasper, Alberta. 

Karim Mouait

“Depending on the carrier, they’re not offering section C (comprehensive and collision),” Karim Mouait, IBAA president and president of Cornerstone Insurance Brokers Ltd., told Insurance Portal. “When you think of wildfire, I always think of burning buildings but it was also all the cars and trucks and everything in garages that burned up. Or when you think of hail and wind, people usually think of their homes, for example, but it’s also all of the cars that were damaged.” 

On top of this, tariffs have led to double digit increases in the price of parts, a development which he says came out of left field.

Uninsured motorists 

His two biggest concerns regarding the rate cap are the potential for an elastic price rebound when insurers are eventually able to price the business differently – a shock to the system he says could make coverage unaffordable – and the risks posed by a growing population of uninsured motorists.

The third fear is that more insurers leave the province. After the exit of Zenith Insurance in 2023, Sonnet Insurance in December 2024 and S&Y Insurance Company in January 2025, he says today there are 42 remaining. At his own brokerage alone, Mouait adds that hundreds have experienced difficulty securing the coverage they need. Extrapolated to include all of the brokers across the province in his estimate, he conservatively guesses that the effect is being felt by tens of thousands of drivers, at a minimum. The exit of the insurers mentioned above, he says have also left between 40,000 and 50,000 seeking alternative coverage. “Due to confidentiality rules, it is difficult to access the actual number,” he says. 

Closing up shop 

“It’s not profitable. They want to divest themselves, if possible, or get adequate rates. They’re looking for ways to just remain profitable in the province. If not, they’ll just close up shop and leave,” he adds. “At some point you’re going to have to price for the product accordingly.” 

The concern is being echoed by C.D. Howe Institute fellow-in-residence, Gherardo Caracciolo in a new memo, Auto Insurance Over-Regulation is Punishing Drivers. “When insurers can’t update their rates to match mounting repair costs or the rising impact of extreme weather, they risk losses that threaten their financial health. If enough losses pile up, some insurers may simply pull back from the market, leaving fewer companies competing for drivers’ business,” he writes. “Rate regulation is not the way to address worries about insurers’ conduct. Canada already has plenty of review mechanisms and regulatory bodies to deal with such things,” he adds. “Flexible pricing combined with oversight of firms’ conduct strikes a better balance.” 

He concludes by saying the financial challenges are not going away: “Tariffs, climate change, inflation and global supply shocks are here to stay. If we want a competitive, stable insurance system that works for everyone, we need to let insurers adjust to reality.” 

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