Alberta brokers sound the alarm on auto insurance availability 

The Insurance Brokers Association of Alberta (IBAA) says drivers are increasingly unable to secure insurance coverage due to the province’s ongoing rate cap on auto premiums. 

Auto insurers have increasingly scaled back or terminated coverages because of the rate cap hampering their profitability, leaving clients without proper insurance coverage, IBAA reports. 

“Unfortunately, as auto insurers reduce available coverages or withdraw from the Alberta market due to the rate cap, brokers are increasingly unable to find coverage options that are both accessible and affordable for many drivers in the province,” says IBAA CEO Jhnel Weller-Hannaway.  

In Alberta, the ‘good driver’ rate cap limits insurance premium increases for eligible drivers. For 2025, the rate cap is set at 7.5%, which includes a 5% cap for good drivers and an additional 2.5% due to natural disaster repair costs. 

The good driver rate cap is the latest iteration of rate intervention by the governing United Conservative Party. The party first implemented a rate pause in January 2023. 

Under the Alberta government’s good driver rate cap, a good driver is everyone except those who have:  

• Any at-fault accidents in the last six years  

• Any criminal code traffic convictions in the last four years  

• Any major traffic convictions in the last three years  

• More than one minor traffic conviction in the last three years 

The government has said it estimates the cap would apply to about 80% of the province’s drivers.

Who can’t get coverage

At the IBAA Convention in May, brokers explained how clients who don’t qualify as “good drivers” are falling between the cracks. 

Because of the rate cap, Alberta auto insurers are reportedly losing money. In response, several insurers have either reduced the size of their auto insurance book or have withdrawn from the provincial auto market. Consequently, IBAA reports certain drivers are unable to secure the coverage they need, including: 

• Owners of leased vehicles, who are increasingly unable to secure the collision and comprehensive coverages required in their lease contracts; 

• Drivers whose insurer have left the province and must find a new carrier; and, 

• Drivers with a history of claims or roadside infractions. 

Further intervention

IBAA’s alert comes at a time when regulators are concerned about consumer access to insurance. A Jun. 30 bulletin from Alberta’s Superintendent of Insurance now requires insurers that end contracts with brokers to treat existing customers who switch to a new broker as renewals, not new business. 

As insurers have explained to Canadian Underwriter in the past, drivers who shopped policies, changed their vehicles, moved neighbourhoods, or moved to Alberta from out of province, would be subject to a new insurer’s rating methodology, and so the rate cap wouldn’t apply.

Recently, the provincial insurance regulator has found insurers who cut contracts with brokers are treating clients who switch brokers as ‘new business,’ and so the cap does not apply.

And so the regulator is now serving notice that insurers who terminate contracts with brokers — and then refuse to renew private passenger vehicle (PPV) insurance policies for existing Alberta customers who switch brokers to maintain their coverage — may be in violation of sections of the province’s Insurance Act. 

“The Superintendent has noted that following the termination of a contract an insurer has with an insurance broker, some insurers refuse to renew PPV policies through a different authorized broker,” the bulletin reads. “Instead, they treat the insured as new business rather than as a renewal.

“As a result, these insurers refuse to apply ‘Good Driver’ premium protections and/or offer coverage that is more restrictive than what would have been provided under a renewal.” 

Reform progress stalling, IBAA says 

In May, the UCP passed Bill 47, the Automobile Insurance Act, a type of no-fault insurance. The bill intends to largely eliminate litigation from the auto insurance system and provide a care-first model designed to provide improved access to health and medical benefits. The model will see private insurers continue to provide coverage in the province.

The model does carve out some exceptions, however, that will allow lawsuits under certain circumstances — if there is a catastrophic injury, for example, or if an at-fault driver is convicted of offences under the Criminal Code or Traffic Safety Act.

Alberta’s brokers have joined a chorus of insurers in warning that too much room for litigation will negate any intended premium savings. 

“For the [care-first] system to be successful and deliver savings to Alberta drivers, the government will need to strike a balance between the benefits provided to those injured in collisions and the amount of litigation that remains in the system. The evidence is clear – the more lawyers are involved in the auto insurance system, the less money drivers will save,” Aaron Sutherland, Insurance Bureau of Canada’s Pacific and Western vice-president, said at the time of the bill passing.

Likewise, IBAA emphasizes the care-first model faces challenges in improving insurance affordability.  

“In light of the fact that costly court access remains a feature under the new system, IBAA is concerned that Alberta will end up having the most expensive care-based model of any jurisdiction in Canada,” the association says in a statement.

“There is still time for the government to succeed in its goal to build a better, more affordable system,” says Weller-Hannaway. “We implore the government to lift the rate cap so that competition and choice can return to the market. We strongly recommend adoption of reforms that focus on care, while improving premiums cost and accessibility for consumers whether or not they are involved in collisions.”