Auto insurance in Alberta facing a "crisis" after Calgary hailstorm
The Insurance Bureau of Canada (IBC) says expenses from Calgary’s summer hailstorm may push insurers out of Alberta, putting extra pressure on an already strained auto insurance system.
The IBC says the August hailstorm caused roughly $2.8 billion in insured damage and 130,000 insurance claims. Over half of those claims – about 70,000 of them – were for damage to vehicles; it’s estimated that auto damage claims alone cost $900 million.
The hailstorm is now the second-largest insured loss event in Canadian history, and the IBC is warning that the huge amount of auto insurance claims from the recent Calgary hailstorm could create an economic environment that may push even more insurers out of the province due to the rate cap.
Before the hailstorm, auto insurers had already paid out more in claims and expenses in 2024 than they had received in premiums, according to the IBC.
“The Calgary hailstorm will add $900 million in unexpected claims cost pressures at a time when Alberta’s auto insurance system is in crisis due to the province’s rate cap,” said Aaron Sutherland, vice president of Pacific and Western at IBC. “Under the rate cap, auto insurers are unable to recover from the growing cost of claims over the past two years. This has created a dire economic environment that has forced several companies to leave Alberta’s auto insurance market, limiting competition and choice for consumers.”
The IBC added that unless the rate cap is removed, the high number of new claims from the hailstorm will contribute to Alberta’s already “tenuous market conditions,” which may result in more insurance carriers making a similar exit from the market.
It went on to say that the significant, unexpected cost of the Calgary hailstorm exacerbates the risk of carrier withdrawal due to the rate cap and is a “clear example of why it’s urgent that the government remove the rate cap to restore competition and choice for consumers.”