Auto insurance companies keep leaving Alberta. Here's why

Albertans pay some of the highest auto insurance premiums in the country — but some insurers say the business isn't profitable here.

When Zenith Insurance decided to pack up shop last summer, Premier Danielle Smith was skeptical any other auto insurers would follow. 

"I'll believe it when I see it," she said in a press conference last July. "There's obviously a lucrative market here because we're one of the few markets that operate in a free enterprise system."

Now, two more providers have left in the span of three weeks. Sonnet Insurance Company and Aviva subsidiary S&Y both recently announced plans to phase out their auto insurance businesses in Alberta, citing claim costs that exceed premiums collected as well as a lack of opportunity to grow profits. 

According to a statement from the province, combined the companies make up about one per cent of insured vehicles in Alberta. It is unaware of any other insurers leaving.

In an interview on Monday, auto journalist Lorraine Sommerfeld told CBC's Radio Active that these exits are "warning signs.

"They're not good signs of what could happen. And I think your premier needs to take this a little more seriously."

In a new report this week, credit rating agency DBRS Morningstar warned other insurers could also be eyeing the exit doors.

"We believe that others may follow," DBRS Morningstar said. "Even those who do not have plans to withdraw from the market per se may be implementing cost savings measures that are reducing the accessibility and availability of auto insurance."

Aaron Sutherland, the Insurance Bureau of Canada's vice-president of Pacific and Western regions, shared those concerns.

"I think we're reaching a crisis point in Alberta's auto insurance market," he said, adding that 17 insurers lost money on the sale of coverage last year. 

Consumer frustration with high prices has led multiple provincial governments to attempt to offer some relief. 

Under former NDP premier Rachel Notley, during the period 2015 to 2019, annual premium rate increases in Alberta were capped at five per cent. The cap was eliminated in 2020 only to be re-introduced by the United Conservative government in 2023 in the form of a year-long rate freeze that barred insurers from filing for new rate increases for customers with clean driving records. Rate increases are now capped at 3.7 per cent.

Sommerfeld said that while caps make consumers happy in the interim, they're not a real fix because the cost of repairing vehicles continues to soar with the impacts of the pandemic, inflation, and higher rates of fraud and theft.