Let's be honest. Auto insurance in Alberta is expensive, and people are frustrated. I hear it constantly, and I will admit I am right there with you. I pay it too. But after two decades in this industry, I can tell you the reasons behind the number on your renewal are not what most people assume, and they are worth understanding.
Start with a fact that stops most people cold. In 2024, Alberta's auto insurers paid out 18% more in claims and expenses than they collected in premiums, losing over $1.2 billion. That comes from the Alberta Superintendent of Insurance's own annual report, not from the industry. Thirty-five auto insurers in this province lost money that year. That is not a typo, and it is not a story about greed. It means the premiums Albertans paid did not cover the claims Albertans made.
When a market loses money year after year, companies leave. Some insurers have exited Alberta entirely and others have restricted how much coverage they will sell. That is why you, or someone you know, is finding it harder to get a policy or is being offered fewer options than before. Less competition is not good for any of us.
So where is the money actually going? According to the Insurance Bureau of Canada, the national association representing Canada's private home, auto and business insurers, roughly 20% of what Alberta drivers pay goes to legal costs. The same organization reports that up to 40% of a litigated claim ends up with personal injury lawyers rather than the injured driver. In a system meant to help people recover after a collision, a large share of the money never reaches the person who got hurt.
That is what the Care-First model is meant to change. Beginning January 1, 2027, Alberta moves to a system designed to put money into care and benefits for people injured in collisions instead of into litigation. The Government of Alberta estimates the average driver will save about $260 a year, and the model is intended to deliver the highest level of recovery benefits in the country. Recent polling found 57% of Albertans support reducing the ability to sue in exchange for those savings and improved benefits, while just 13% want to keep the right to sue at current levels.
None of this makes your renewal feel any better. But understanding why the number looks the way it does, and what is changing in 2027, at least puts you in the driver's seat of the conversation instead of just absorbing the hit.
If you want to talk through your own policy and where you actually stand, my door is always open.
Mandy Stierman, Founder and Principal Broker
Velocity Insurance Inc. | www.velocityinsurance.ca