Because of the suddenness of the rate cap each insurance company was sitting with different rates prior to the cap leaving them with different needs to become rate adequate today. We expect the result of these increases to create more stable pricing among insurance companies in Alberta. From what we've seen so far, we're expecting there to be an average of somewhere around a 15% increase in the Alberta auto insurance premium.
Put simply, the cost of auto insurance claims far exceeds the current level of premiums. Auto insurance in Alberta has been in crisis since 2016. Insurance companies have been paying as much as 130% of their collected premiums out in claims costs, and that is simply unsustainable. Some of the reasons for these rapidly increasing claims costs are:
There is no immediate fix for this. Insurance companies are working with the government to find a solution that would lower claims costs and allow for lower insurance premiums, but this will take time. We're happy to see that the current Alberta Government has been working with our industry on these issues and are hopeful they will continue to work towards finding a solution that will benefit all Albertan's.