At Armour Insurance, transparency is one of our most important core values. We do our best to be transparent with our team, our partners, and of course our valued customers. So, in the spirit of transparency, we'd like to share some of the data we have on insurance prices year over year in Alberta.
* This data is based on the average prices of new insurance policies we've seen and won't necessarily reflect your experience. The sampled data is comparing June-August 2022 and June-August 2023.
How Much Has Car Insurance Gone Up In 1 Year?
Personal Auto Insurance From June 2022 – August 2022
- Average Annual Cost: $2,486
- Average Monthly Cost: $214.42 (assuming 3.5% financing fee)
Personal Auto Insurance From June 2023 – August 2023
- Average Annual Cost: $2,545
- Average Monthly Cost: $219.50 (assuming 3.5% financing fee)
1 Year Cost Increase in Alberta For Personal Auto Insurance
- Annual Cost Increase: $59
- Monthly Cost Increase: $5.08
- Auto Insurance Increase: 2.37%
- Alberta Inflation Rate: 4.3%
What About The Car Insurance Rate Freeze?
In January 2023, the Alberta Government implemented a rate freeze for personal auto insurance. This preventing insurance companies from requesting rate increases from the Alberta Auto Insurance Rate Board (AIRB) while the freeze is in place. Because of the annual nature of Auto Insurance policies in Alberta, consumers could still be seeing changes in their insurance premiums that were in place up to a year prior to their renewal. Those who only carry basic liability coverage on their vehicles may have also see an increase due to the AIRB instituting a 10% increase in the minimum liability premium charged under the Alberta Grid program. This went into effect in January of 2023.
Why Do My Car Insurance Premiums Go Up?
There are multiple factors that go into a car insurance premium year over year. Inflation is only one factor. Any of the following factors could also cause a car insurance premium increase:
- Tickets or convictions
- Change in commute distance
- Problems in the payment history
- Location statistics (new or the same)
- Value of the vehicle
- Coverage and deductibles
- Insurance claims
- Other factors
There are many factors that go into a car insurance premium. A full breakdown of what goes into a car insurance premium is available here.
What Do We Expect Car Insurance Rates to Do in 2024?
Looking ahead to 2024, most if not all factors point to increases in premiums. We are predicting an increase in car insurance premiums from 2023-2024. We believe this increase will be driven by 3 factors:
- An end to the insurance rate freeze
- An increase in the total number of claims
- An increase in the cost of each claim
End to the Alberta Car Insurance Rate Freeze
The January 2023 auto insurance rate freeze is set to end on December 31, 2023. We do not know if there will be continued intervention like this.
Insurers need to apply for rate increases through the Alberta Auto Insurance Rate Board or AAIRB.
Increase in Total Claims
In 2020, many daily commuters were quickly shifted to remote work. This meant considerably fewer drivers on the road which led to less accidents. Fast forward to 2023 and many workplaces are asking employees to return to the office for work. This has increased traffic on the road to near pre-pandemic levels. Collision data for 2022 is not yet available, however, if we look at historical accident data for Alberta, it is likely we will see an increase of 32,000-47,000 accidents from the levels of 2020 and 2021.
| Accidents Recorded in Alberta | |||||
| 2021 | 2020 | 2019 | 2018 | 2017 | 2016 |
| 100,321 | 95,001 | 132,072 | 142,596 | 142,467 | 133,124 |
With the understanding that there is likely to be an increase in collisions, there will be a corresponding increase in the number of claims. This will only be exacerbated by the increased cost of car insurance claims.
Increased Cost for Claims
The cost of claims has also seen a significant increase. Supply chain issues have resulted in lower inventory for replacement parts which often results in longer lead times for necessary repair parts. Additionally, a shortage of skilled labour in the autobody and auto repair industry has resulted in repair facilities increasing rates and wait times. With repairs taking longer to be completed, rental vehicles are needed for longer periods after an accident. A shortage of rental vehicles has increased the cost of providing temporary replacement vehicles for policy holders.
An additional factor to the price of auto insurance claims is personal injury litigations. Alberta does not currently have a cap on personal injury suits, which has led to an increase of personal injury lawyers in Alberta. Personal injury claims have increased in Alberta, resulting in larger claims against insurance companies. Without a regulated maximum for personal injury claims, insurance companies have been paying out large settlements.
This has culminated in a perfect storm where claims are taking longer and costing more than ever before. Unfortunately, these cost increases are going to be reflected in insurance premiums for everyone. More information about insurance inflation is available here.
What Can I Do If My Car Insurance Has Gone Way Up?
If you’ve seen a significant increase in your insurance premiums, talk to your insurance broker or agent. They may be able to find a way to help lower your premiums or at the very least explain why the premium has increased. As an insurance broker we can check the rates with many different insurance companies saving you the hassle of making multiple calls.
If you’re a client of Armour Insurance, we have a process called Automatic Policy Review. Prior to the end of the policy term, your broker will review your policy for any missing coverages, look for possible discounts or benefits, and review your premium year over year. If we see a substantial increase in insurance premiums, we investigate what that premium increase was caused by. If there isn’t a way to reduce your premium with your current insurance company, then we can remarket your policy with a different company to try and get you a better rate.
Want to start working with Armour? Give us a call!
