Advocates say two taxes are adding $100 to Alberta driver's insurance policies

The Canadian Federation of Independent Business (CFIB) and the Insurance Bureau of Canada (IBC) say the Alberta government should axe two taxes that add about $100 to auto insurance policies.

The two trade bodies are calling for the removal to be included in the 2024 provincial budget, with a news release stating that the province charges a 4% Insurance Premium Tax (IPT) on every driver’s auto insurance policy.

“The amount of tax collected through the IPT has grown by 28% since 2018 and has resulted in over $1 billion in increased costs to Alberta’s drivers. Removing this tax would provide tangible savings to drivers,” the organizations stated.

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The second tax the CFIB and IBC pointed to for removal is a levy added onto auto insurance to recover health care costs, which is set to increase by 28% in 2024.

“This levy is added to the cost of auto insurance premiums and is rising to $86.8 million this year,” they added.

Combined, these two taxes add approximately $100 to every driver’s insurance policy each year.

“Alberta’s auto insurance market is under considerable strain due to inflation, severe weather, auto theft, and rising legal costs,” said Aaron Sutherland, vice president of Pacific and Western at IBC.

“IBC is eager to work with the government to undertake reforms to address these costs and improve the affordability of auto insurance. In the interim, we are asking the province to remove – or at the very least pause – the IPT and cost-recovery levy for health care as a way to provide near-term relief to drivers.”

Daily Hive reached out to the Alberta government for comment on this issue, with Savannah Johannsen, Press Secretary for Treasury Board and Finance stating “The government is exploring all options to make auto insurance more affordable in Alberta and are considering all recommendations from Albertans and insurance experts.”

Johannsen went on to add that the province has commissioned an external consultant to conduct an in-depth analysis to inform long-term reforms.

“The insurance models of other jurisdictions – both within Canada and abroad are also being analyzed. The results of the analysis will help inform the government’s decision in implementing sustainable, long-term solutions to address auto insurance affordability in Alberta.”