If you live in Alberta, you may need to brace yourself for higher car insurance rates. Aviva Canada, recently confirmed they're planning to raise rates by 15 percent in January. Alberta's Automobile Insurance Rate Board has approved the increase. High-risk drivers may end up paying even more.
The Insurance Bureau of Canada, which represents 90 percent of Canada's property and casualty insurance market, indicated that other auto insurance companies are also applying for rate hikes. However, details on which other companies plan to raise rates isn't currently available. We expect to learn which other companies will be following suit within the next few months.
Why Alberta Insurance Companies Are Raising Rates
Before you think insurance companies are merely trying to squeeze out more profits, it's helpful to understand the current state of the auto insurance industry. Car insurance companies have been operating at a loss, losing an average of 12 cents for every dollar spent.
Until a couple of months ago, Alberta's government enforced a cap on car insurance premium increases. Under these rules, car insurance companies couldn't raise rates by more than five percent each year. However, more expensive cars and more frequent accidents lead to higher repair costs.
As a result, some Albertans were required to pay for a full year of premiums up front, had reduced access to collision or comprehensive coverage, and some faced barriers to renewing or applying for insurance, as auto insurers took steps to minimize their losses.