Over $7K to insure a car in Alberta — How the province got to this point and is there any relief in sight?

"You would expect I'm driving a Lamborghini, but it's a Honda Civic,” he told CBC News.

Unfortunately, Hassan’s situation isn’t unique. Many Albertans are facing higher rate premiums, especially drivers in Calgary. Heather Mack, a policy and communications advisor with the Automobile Insurance Rate Board (AIRB) says that they have “serious concerns about the health of the market right now,” she told CBC.

What is causing rate increases in Calgary and beyond?

In a recent market report, the AIRB outlined a number of factors that are causing insurance rate increases for Albertans, most notably Calgarians. Insurance providers across the province saw a loss ratio of over 97% in 2024, largely due to “skyrocketing bodily injury claim costs” and the catastrophic hailstorm in Calgary in August of last year, the report noted. In simple terms, this ratio means that for every $1 earned in premiums, Albertan insurers paid $0.97 in claims alone, not including staffing costs and other administrative fees.

According to the Insurance Bureau of Canada (IBC), last year was the most expensive for insurance companies for catastrophic weather events on record, as over $8.2 billion in insured damages were reported. Alberta alone saw half of this damage — $4.1 billion — which places pressure on Albertan insurance companies to raise their premiums, the organization noted.

The AIRB warned that as climate change continues to quicken in Canada, it sees more catastrophic weather events occurring in the province. For some Albertans in northern Calgary, the AIRB sees weather-related insurance coverage coming off the table entirely.

This raises an important question: What is the provincial government doing about these rising rates?

How the Alberta government is responding to the hostile market

As part of continuing insurance reform, such as rate pauses in 2023, the Alberta government is planning to move to a new no-fault insurance program known as “care-first” in 2027.

In short, the no-fault program aims to largely remove Albertans’ right to sue drivers for compensation, and instead increase driver benefits. Initially, the Alberta government projected cost savings of $400 per year on insurance premiums, but the province has stepped back from those claims, CBC News reported.

According to the government’s proposal, the driving force behind these cost savings for consumers is reducing the need for litigation, which drives up the cost of insurance premiums for residents.