Two auto insurance companies announce plans to leave Alberta

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S&Y Insurance coverage Firm — a subsidiary of Aviva — has grow to be the third auto insurer to declare its intention to depart Alberta inside the final yr and the second inside three weeks.

On Wednesday, Aviva introduced it will be phasing out its dwelling and auto enterprise in Alberta beginning in January 2025.

“After cautious evaluate of our direct-to-consumer enterprise, we needed to make the troublesome determination to exit as the present setting in Alberta doesn’t foster development,” Susan Penwarden, managing director of Aviva Canada, mentioned in a press release.

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Aviva mentioned litigation prices have been the most important think about driving up insurance coverage premiums, noting declare prices have exceeded premiums collected in Alberta “for a few years.”

“We wish to proceed to supply Albertans alternative and inexpensive auto insurance coverage. However auto insurance coverage in Alberta has not been worthwhile for a few years.” Aviva mentioned

Twenty days earlier, Sonnet Insurance coverage additionally introduced its intention to withdraw from the Alberta auto insurance coverage market, efficient Dec. 13, 2024.

“Sonnet will proceed to focus its efforts to profitably develop its auto insurance coverage enterprise in different areas in Canada,” mentioned government vice-president Paul MacDonald.

“Restricted alternatives for Sonnet to develop profitably within the present auto insurance coverage working setting in Alberta have been a key consideration in making this determination,” the corporate’s assertion learn.

Sonnet will proceed to supply property and pet insurance coverage within the province.

Each Sonnet and S&Y will present auto insurance coverage to their current clients till their respective withdrawal dates.

Final July, an unnamed insurance coverage firm — later revealed to be Zenith Insurance coverage, which was bought by way of Costco — introduced it will withdraw from the province in November 2023, affecting round 16,000 drivers. On the time, Premier Danielle Smith mentioned she was skeptical different insurers would go away the province.

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“I’ll consider it once I see it,” she mentioned.

‘Engaged on long-term reforms’

Alberta Finance Minister Nate Horner was on trip this week and never accessible for an interview.

His workplace issued a press release Thursday, saying it was unaware of different firms planning to exit the province. It mentioned three firms collectively represented round one per cent of autos in Alberta.

“We acknowledge Albertans are combating charges and acknowledge (the) trade’s issues about rising price pressures,” the assertion learn.

“We’re engaged on long-term reforms to ensure Albertans have entry to inexpensive insurance coverage and to stabilize and maintain the auto insurance coverage trade.”

In Could, the province launched an internet survey to hunt public suggestions on the way forward for insurance coverage in Alberta. Greater than 16,000 Albertans stuffed out the survey, which closed June 26.

Addressing ‘underlying price pressures’

Final November, the federal government introduced it will restrict fee will increase to the province’s September 2023 inflation fee — 3.7 per cent — for “good drivers,” estimated to be about 75 per cent of Alberta motorists.

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The Insurance coverage Bureau of Canada (IBC) — the nationwide trade affiliation representing most insurance coverage firms — is looking on the province to drop these fee caps to scale back insurance coverage prices.

“Everyone desires extra inexpensive auto insurance coverage, however the one option to obtain that’s by addressing the underlying price pressures impacting driver premiums. Charge caps, fee pauses, fee interventions — they don’t do this,” mentioned Aaron Sutherland, vice-president of IBC.

He mentioned authorized payments are additionally a driver of insurance coverage prices and referred to as for extra market competitors to scale back premiums.

“We expect one of the best ways we are able to do that’s give Albertans extra alternative and allow them to determine if they need protection that features the flexibility to sue for one thing like a minor harm,” he mentioned.

Others have argued that the fitting to sue should be maintained and trimming insurers’ income is a greater option to scale back prices for drivers.

Sutherland pointed to the province’s report that claimed 17 firms misplaced cash on the sale of auto insurance coverage however agreed that one thing wanted to be executed.

“Any change goes to take time. It’s going to require laws. It’s going to require regulation, after which the trade goes to want time to implement it and mirror it in driver premiums,” Sutherland mentioned.

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