On June 11, 2025, the Alberta Auto Insurance Rate Board (AAIRB) released its 2025 Annual Review of Industry Experience. This 231-page document is a detailed look at the current state of Alberta’s auto insurance market. While most people are unlikely to sit down and read the entire report, the data contains surprising and, in some cases, alarming insights about how the industry is performing, how premiums are trending, and what that means for drivers. After reviewing the numbers in detail, we found three facts that may change how you think about auto insurance in Alberta.
What is the AAIRB?
The AAIRB is the independent regulator that oversees automobile insurance rates in Alberta. Its job is to ensure that premiums are fair and reasonable while also protecting the financial stability of insurance providers. The board reviews rate filings from insurers, sets benchmark rates for certain coverages, and tracks trends in claims, costs, and market performance. The annual industry review is a way for the AAIRB to share this information with the public, offering a clear view of how insurers are operating, where costs are changing, and how these trends affect what Albertans pay for coverage.
3 Key Insights From the 2025 AAIRB Report About Alberta's Personal Auto Insurance Industry
- The average cost of personal auto insurance claims in Alberta has more than doubled since 2019, increasing by 112%.
- Severe weather events caused a 143% cost increase for comprehensive claims in 2024 over the 5-year average.
- Alberta auto insurers have recorded net losses in four of the past six years.
Average Auto Insurance Claim Costs in Alberta Have More Than Doubled Since 2019
In order to get a complete picture of the state of Alberta's personal auto insurance market, we looked at data from 2019 through to 2024. To calculate the average cost of an insurance, we collected the data for the following four claim types: Bodily injury (liability), property damage (liability), comprehensive (fire, theft, vandalism, & natural disaster), and collision. This was the calculation used to determine the average claim cost:
TOTAL COST OF CLAIMS = AVERAGE COST OF CLAIMS
TOTAL NUMBER OF CLAIMS
This calculation resulted in the following results:
| Type of Claim | 2019 Average | 2024 Average | % Change |
| Bodily Injury | $79,739 | $178,609 | +123.9% |
| Property Damage | $5,915 | $8,304 | +40.4% |
| Comprehensive | $6,286 | $11,150 | +77.4% |
| Collision | $6,462 | $11,166 | +72.8% |
| Total | $98,402 | $209,229 | +112.6% |
In just 6 years, the average cost of each claim type has exploded. The most egregious increase is coming from bodily injury claims, with nearly a $100,000 increase in the cost of each bodily injury claim.
Severe Weather Drove a 143% Surge in Comprehensive Claims Cost in 2024
Early on in 2025, the Insurance Bureau of Canada published a report indicating that 2024 was the single most expensive year for severe weather events in Canadian history. Notable Alberta events included the Jasper wildfire and Calgary hailstorms. When looking at the number and dollar value of comprehensive auto insurance claims, the impact is highly noticeable.
| 2019-2023 5-Year Average | 2024 | % Change | |
| Number of Comp Claims | 68,627 | 110,935 | +61.6% |
| Cost of Comp Claims | $508.4 Million | $1.237 Billion | +143.3% |
| Average Cost Comp Claims | $7,378 | $11,150 | +51.1% |
When the Alberta Government announced sweeping reforms to the auto insurance industry in November of 2024, they also allowed for a 7.5% increase in insurance premiums for "safe drivers". 5% of that increase was to account for inflationary pressures, while the other 2.5% increase was to account for severe weather events.
Given that the cost of comprehensive claims nearly tripled in 2024, the 2.5% increase for severe weather events is far from covering the additional $700 million in damages.
Alberta Auto Insurers Have Operated at a Loss in 4 of the Past 6 Years
In the insurance industry, one of the most important measures of financial health is the loss ratio. The formula is straightforward:
INSURANCE PREMIUMS IN = LOSS RATIO
INSURANCE CLAIMS PAID OUT
A loss ratio on its own does not tell the full story. To understand profitability, you need to consider the other costs of running an insurance company. On average, administrative expenses such as staff, technology, and overhead account for about 27% - 30% of premium dollars. The industry standard target is roughly seven percent profit after both claims and expenses are accounted for. That means insurers need to keep their loss ratio near 60%-65% in order to reach that level of profitability and have a loss ratio of less 73% to even break even.
The chart below shows the trend for Alberta personal auto insurance loss ratios from 2019 through 2024. It includes both the raw loss ratio and the loss ratio with a conservative 27% administrative cost added in.
The only period where insurers operated with positive margins was during 2020 and 2021, when driving activity dropped dramatically during the pandemic. Outside of those two years, the industry has consistently recorded loss ratios that exceed sustainable levels. In 2024, for example, the loss ratio with administrative costs reached 133.5%, meaning that for every dollar of premium collected, insurers were paying out $1.33 in claims and expenses.
The broader data confirms how severe these losses have been. According to the Alberta Auto Insurance Rate Board, 23 out of 25 major insurers in the province lost money in 2024, with average losses equal to about 20 percent of premiums collected. Six insurers lost more than 40% of their premium revenue. Unsurprisingly, some companies have already exited the market. When Sonnet and Aviva Direct announced their withdrawal from Alberta’s auto insurance sector in 2024, it caught many drivers off guard, but the financial pressures shown in these loss ratios explain their decision.
The risks are not only financial but also systemic. As the AAIRB itself has warned, continued losses raise the possibility that insurance may become unavailable in high-risk regions such as northeast Calgary, where repeated hailstorms have generated hundreds of millions of dollars in claims. For drivers who finance their vehicles and are required to carry full coverage, the inability to secure affordable insurance could mean they cannot legally stay on the road.
What Does All of This Mean for the Alberta Auto Insurance Market?
A note about vehicle financing*
For many Albertans, the connection between insurance and vehicle financing is not always top of mind, but it is critical. When you finance a vehicle, the lender requires that you carry full coverage, which means both collision and comprehensive insurance. If that coverage is cancelled or removed, your insurer notifies the finance company. The lender will then demand that you reinstate coverage immediately. If you are unable to secure it in time, the finance company can require you to pay the remaining balance of your loan in full. This leaves drivers with only a handful of painful choices: paying off the vehicle out of pocket, selling it to clear the debt, or returning it to the dealership at a loss. Each of these outcomes can be financially devastating.
Strict Auto Insurance Underwriting
In today’s market, a distracted driving ticket (classified as a major ticket) can prevent you from obtaining collision and comprehensive coverage or even lead to those protections being stripped from your policy. For drivers with financed vehicles, this can quickly cascade into losing the vehicle altogether.
Similarly, two at-fault accidents in six years, or even a combination of one at-fault accident with a major or minor ticket, can make you ineligible for full coverage. Even two minor convictions in three years can result in a denial of collision and comprehensive protection.
The restrictions do not stop at driving records. A history of non-payment can be just as damaging. If your policy has been cancelled for non-payment within the last three years, it is nearly impossible to secure monthly payment options again. For households with multiple vehicles and a home insurance policy bundled together, this could mean a sudden bill of thousands of dollars due all at once, without the option to spread it out.
To help clarify some of the restrictions already in place for auto-insurance underwriting, we have put together this chart of how coverage and monthly payments are impacted by your driving, insurance, and payment history:
| Monthly Payments |
Liability Insurance | Collision | Comprehensive | |
| Cancellation for Non-Payment | No | Yes | Yes | Yes |
| 1 Minor Ticket | Yes | Yes | Yes | Yes |
| 2 Minor Tickets | Yes | Yes | No | No |
| 1 Major Ticket | Yes | Yes | No | No |
| 1 At-Fault Accident | Yes | Yes | Possibly, but high cost | Possibly, but high cost |
| 2 At-Fault Accidents | Yes | Yes | No | No |
| 1 Af-Fault Accident + 1 Minor Ticket | Yes | Yes | No | No |
| 1 Criminal Code Violation | Yes | Yes | Possibly, but high cost | Possibly, but high cost |
| 1 License Suspension | Yes | Yes | Possibly, but High Cost | Possibly, but high cost |
| Cancellation for Non-Payment + 1 Minor Ticket | No | Yes | Yes | Yes |
Please note that each of the above events will stay on your record for years, having an impact for significant periods:
- Cancellations for non-payment stay on your record for 3 years
- Major and minor tickets stay on your record for 3 years
- Criminal code convictions stay on your record for 4 years
- At-fault accidents stay on your record for 6 years
Long Waiting Periods for Approval
Our brokerage team is already seeing the impact on the ground. Approximately 80% of applications now require manual underwriting review, a process that often takes between 14 and 21 days for approval. That means long waiting periods before coverage is approved, leaving drivers in limbo. Taken together, these restrictions point to a market that is already under strain, with ordinary Albertans caught in the middle.
Conclusion
With auto insurance reform scheduled to take effect in early 2027, there is optimism that some of the pressures on Alberta’s insurance market will ease. Until then, however, drivers should be prepared for an environment that remains difficult for both insurers and policyholders. Rising claims costs, severe weather events, and years of industry losses have created a challenging landscape that is unlikely to improve overnight. While change is on the horizon, the reality for the near future is that Alberta’s auto insurance market will continue to feel the strain.
