Alberta drivers know that high auto insurance costs are nothing new, but the Alberta Government has been making reforms promised to help bring rates down. Recent data shows, however, that the problem hasn’t been solved. The CBC recently reported on a 21-year-old trying to insure their 2018 Honda Civic, for example, and who was quoted premiums as high as $880 per month. He ultimately secured the lowest available policy he could find at $590 per month with a $2,500 deductible — totalling $7,080 annually.
According to the Automobile Insurance Rate Board (AIRB), such cases are no longer outliers. They recently published a comprehensive report that dives deep into rising rates and how, in some parts of Calgary, insurance could eventually become unaffordable, or even unavailable, due to repeated hail storms and rising losses.
Hail storms driving record payouts
It’s not surprising, given that Alberta has experienced at least one severe hail storm every year for the past five years, that this province has racked up $6 billion in insured damages during that time. Severe weather, particularly hail, is now one of the single biggest cost drivers in Alberta’s auto insurance market, and this year has been no different.
- The July 13 Calgary hail storm caused nearly $92 million in insured damage, according to Catastrophe Indices and Quantification Inc. (CatIQ).
- 65% of all claims from the July storm were for vehicle damage.
- The August 5, 2024, storm remains the most devastating, with $3.2 billion in insured losses. It is the costliest hail storm, and second costliest natural disaster, in Canadian history.
- Over the past 20 years, Alberta has experienced at least one major hail storm annually, with total insured damages now exceeding $11 billion.
In Calgary’s northeast, where storms often hit hardest, the disparity between premiums collected and claims paid is revealed in the report as staggering. AIRB data shows that in 2024, there were four northeast postal code regions that generated $39 million in comprehensive premiums for insurers, yet those same areas triggered $420 million in claims payouts.
Comprehensive coverage includes theft and weather events, but hail accounted for the overwhelming majority. AIRB is warning that with climate change fuelling more frequent severe storms, there are availability concerns in storm-prone Calgary neighbourhoods. If insurers restrict hail coverage, drivers who lease or finance vehicles will be most at risk, since lenders require full insurance in order to finance vehicles.
Insurers report losing money
Hail is just part of the problem. Across Alberta, insurers report losing money at historic levels:
- In 2024, Alberta auto insurers had a 97% loss ratio, which means they paid out 97 cents in claims for every $1 in premiums.
- Once expenses are added (staffing, commissions, administration), insurers actually paid out $1.20 for every $1 collected.
- 23 of 25 major insurers lost money last year, with an average loss of 20% of premiums collected. Six saw losses exceeding 40%.
Payouts per policy have exploded. The average payout climbed 74% from 2020 to 2024, reaching $1,707 per policy last year. Comprehensive coverage alone accounted for 23.7% of this figure and was driven largely by weather events.
Other claim types are also costly:
- Third-party liability bodily injury claims have nearly doubled in severity since 2020, in part due to higher legal fees and settlements.
- Collision claims declined in frequency by 10%, but their severity rose 65%, as modern vehicles with advanced safety features are far more expensive to repair.
Bad driver behaviour adds pressure
On top of weather and rising repair costs, Alberta drivers are statistically riskier to insure than others in Canada due to some bad habits behind the wheel. Reminder: A minor conviction typically increases auto insurance premiums by 25%, while a major conviction adds 50%, so it is very important to keep your driving record clean.
- 8.7% of Alberta drivers had a minor driving conviction in 2024, compared to 8.2% in Ontario and just 3.2% in Atlantic Canada.
- 0.8% of Alberta drivers had a major conviction (such as speeding 50 km/h over the limit), compared to 0.2% in Ontario and 0.2% in Atlantic Canada.
- 11.3% of Albertans had an at-fault accident on their record last year, compared to 8.3% in Ontario and 8.4% in the Atlantic provinces.
These higher conviction and accident rates reveal that a larger portion of Alberta’s driving population is paying surcharged premiums, which further strains affordability.
Restrictions and caps
With mounting losses, insurers are pulling back on optional coverage. Drivers with major convictions or at-fault accidents are being denied collision coverage outright or offered only very high deductibles.
Although Alberta’s “take-all-comers” rule requires insurers to provide basic liability coverage to anyone who applies, this does not extend to optional coverage like collision and comprehensive. As a result, just 67.1% of high-risk drivers carried collision coverage in 2025, down from 73.2% the year before.
At the same time, the province’s “good driver” rate cap is climbing. In 2024, it was limited to 3.7%, but in 2025 it has been raised to 7.5%. Interested groups such as the Insurance Bureau of Canada (IBC) are calling for all caps to be removed.
Looking ahead: Care-first insurance
The one glimmer of relief may come in 2027, when Alberta shifts to a “care-first” insurance model. This system prioritizes medical, rehabilitation, and income-support benefits, while still holding at-fault drivers accountable with higher premiums.
The AIRB believes care-first will reduce the severity of bodily injury claims, which currently drive some of the highest costs for insurers. However, with the rollout still nearly two years away, the regulator warns that the next 18 months could be especially difficult.
The IBC says the same, stressing that unless rates are allowed to reflect the actual cost of coverage, Alberta’s auto insurance market may remain unsustainable. With insurers paying out more than they collect, restrictions on coverage will likely spread, leaving more drivers struggling to find affordable policies.
Lower auto insurance rates from Lane’s
Alberta drivers face a perfect storm of challenges. Until reforms arrive in 2027, drivers in storm-prone Calgary neighbourhoods, particularly the northeast, may see coverage options shrink even as prices climb.
Are you struggling with high auto insurance rates? Insurance brokers such as us at Lane’s have access to the very best policies available from Canada’s most respected auto insurance providers. We do the shopping for you and know the right questions to ask to ensure you get the best deal available. We are a leading Alberta-based brokerage working out of Calgary, Banff, Edmonton and greater Alberta.
