Two companies will stop offering automobile insurance in Alberta.
Aviva Direct is withdrawing its auto and home insurance services from Alberta effective January 2025. For customers, that means they’ll have to find another insurance company when their current policy expires because Aviva won’t renew it.
Sonnet is phasing out its auto insurance in Alberta later this year. For customers, that means they’ll have to find a different insurance provider when it’s time to renew their coverage. Sonnet’s property insurance is unaffected by this change.
An Alberta government spokesperson said Aviva Direct and Sonnet represent about one per cent of the insured vehicles in Alberta.
“For Aviva, claims costs have exceeded premiums collected in Alberta for many years,” the company explained on its website.
“In particular, litigation costs are the biggest factor driving up auto insurance premiums for Albertans. We acknowledge that the Alberta government has launched a consultation on auto insurance reforms and we are committed to work with the government to find solutions for Albertans and insurers.”
Aviva Direct customers with questions about their policy can call 1-855-788-9090.
Sonnett attributed the decision to stop offering auto insurance to “the current operating situation for insurance companies in Alberta.”
Justin Brattinga, spokesperson for the ministry of finance, said Sonnet and S&Y (a subsidiary of Aviva) are the only companies to withdraw services in Alberta and the province is not aware of any others leaving.
“Alberta’s insurance market, like any free market, is frequently subject to shifts,” he said in a statement to Global News.
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“We recognize Albertans are struggling with rates and acknowledge industry’s concerns about increasing cost pressures. This is why we are working on long-term reforms to make sure Albertans have access to affordable insurance and to stabilize and sustain the auto insurance industry.
“The auto insurance survey closed on June 26, and we are analyzing the results. More than 16,000 Albertans filled out the survey, which focused on how best to enhance affordability, stability, simplicity, accountability and care.”
The Insurance Bureau of Canada said legal costs account for a greater portion of auto insurance premiums in Alberta than anywhere else in the country.
IBC’s western vice-president Aaron Sutherland said the market in Alberta has been “very challenging for a number of years.”
“In early 2023, the provincial government implemented a rate pause restricting insurers from filing for any new increases. This was followed by a rate cap of 3.7 per cent beginning January 2024 for ‘good drivers’ in place while government explores system reform options,” Sutherland said.
He said this has done more harm than good and insurers can’t keep pace with the cost of claims. Sutherland said before Alberta implemented rate interventions, 17 insurers were losing money on the sale of auto insurance.
“As insurers pull back capacity in the market, drivers may have no choice but to purchase new — often more expensive — coverage elsewhere,” Sutherland said. “This is why auto insurance premiums in Alberta increased by 5.24 per cent in 2023, and in the first half of this year, the weighted average approved rate change for companies that have filed and obtain approved rate increases with the AIRB is 7.7 per cent.”
Sutherland said the province needs to act quickly to reform the system, creating capacity and competition in the market and improving affordability for drivers.
“IBC has proposed changes to the auto insurance system that would give drivers more control over their coverage options. When combined with regulatory and tax changes, these reforms could save drivers up to $325 on average,” he said in an email.
— with files from Morgan Black, Global News