Alberta Auto Insurance Premiums Surge: Trends and Future Outlook
In the first half of 2025, Alberta experienced a notable surge in auto insurance premiums, reaching $1,835. This 8.2 percent hike from the previous year, reported by the Automobile Insurance Rate Board (AIRB) in their 2026 mid-year Market and Trends report, highlights the continued struggle with auto insurance affordability. Despite efforts to manage costs, Alberta's auto premiums are the second highest in Canada, outpaced only by Ontario, where the average premium is $2,133.
Premiums have risen faster than inflation, with consumer price index (CPI)-adjusted premiums climbing 6.4 percent. Various factors drive these cost pressures, including an increase in loss costs for full coverage, which rose from $1,417 to $1,470. Meanwhile, the private passenger vehicle loss ratio steadied at around 80 percent. Factors such as vehicle repair expenses, bodily injury claims, and severe weather events, notably a $663 million hailstorm in Calgary in 2024, are reshaping the insurance landscape.
Bodily injury claims have seen a sharp rise, with severity increasing from $83,000 in 2020 to $146,121 in the first half of 2025. Despite increased premiums, insurers recorded a -20.0 percent return on premiums in 2024, underscoring financial strain in the sector. Inflation for private transportation in Alberta, at 6.7 percent as of October 2025, exceeded the national average, further complicating premium calculations.
Market dynamics have shifted, with two insurers exiting Alberta’s private passenger vehicle insurance market in 2025. Remaining carriers have curtailed access to optional coverages, and under the "Take All Comers" rule, they are mandated to offer mandatory coverage only. Some drivers now face higher deductibles, reaching up to $2,000. Consequently, broker contracts have been non-renewed, necessitating signed renewals to maintain coverage.
Government interventions, like the Good Driver Rate Cap, aim to mitigate premium hikes selectively but may not address underlying cost drivers, leading to regulatory imbalances. New provincial regulations redefine "rating program" parameters, impacting how providers assess risk and underwriting practices. This regulatory shift by the AIRB restricts coverage adjustments and hampers potential rate approvals unless underwriting methodologies are revised.
High-risk drivers' collision coverage adoption has decreased from 71 percent to 68 percent. There's been a significant rise in deductibles, with average comprehensive deductibles increasing from $250 in 2005 to $593 in 2025, and collision deductibles averaging $848 in 2025's first half. The AIRB emphasizes that affordable auto insurance is crucial for vehicle-dependent job access, affecting Alberta's broader economic framework. As Alberta braces for the Care-First auto insurance model set for January 1, 2027, the sector faces a period of "heightened uncertainty."