Why Alberta Auto Insurance Rates Keep Rising, Even as Insurers Lose Money

Are Alberta Auto Insurers Actually Losing Money?

We know it sounds like a contradiction. How can insurance companies be struggling, when rates are going up? But the answer is despite higher rates, insurers aren’t receiving enough premium to cover claims costs and expenses.

In 2025, Alberta’s private passenger auto insurers had a loss ratio of 83.6%. Which means the insurers paid out 84 cents in claims for every dollar of premium earned. Now stack on the roughly 27 cents per premium dollar that goes toward staffing, commissions and running the business and you get a combined ratio of about 111%. This means for every $1 they brought in, the insurers spent $1.11 which is a return on premium of roughly -11%.

And it’s not one unlucky company having a bad year. Of the 23 Alberta insurers with more than 15,000 insured vehicles, only 2 managed to turn a profit in 2025. One insurer posted a return of -50.3% and seven insurers came in at -20% or worse.

But aren’t some companies reporting profit nationally?

National profitability does not tell the whole story. The AIRB regulates Alberta auto insurance only and does not consider an insurer’s results from property insurance, commercial insurance, or operations in other provinces.

A national insurer may be profitable overall because it earns profits elsewhere in Canada, while at the same time losing money on its Alberta auto insurance business. Which is why the AIRB focuses specifically on Alberta auto insurance results when reviewing rates.

If insurance companies are not making money, why do they keeping doing business in Alberta?

Ultimately, this is a business decision for insurers. Even though some insurers are not fully covering their costs under today’s auto insurance system, many remain in the Alberta market for several reasons:

• Long-term market presence: Insurers have established operations, relationships with customers and brand recognition in Alberta making it worthwhile to continue serving the market. If they decide to leave, it may be very difficult to regain market share when the market improves.
• Diversification: Alberta is only one part of an insurer’s business and losses in auto insurance may be offset by other lines of business.
• Regulatory framework and potential reform: Insurers anticipate reforms like Care-First will stabilize the market, creating market and price stability into the future.

Didn’t the Loss Ratio Improve in 2025?

The 83.6% loss ratio in 2025 is actually an improvement over 98.9% in 2024 and 97.1% in 2023. So, insurers are bleeding less than they were. But “less bad” isn’t the same as “good”. The AIRB generally considers a loss ratio around 70% to be the point where insurers start to break even. At 83.6%, Alberta is still well above that line, which means the pressure hasn’t let up, it’s just eased slightly.

What Happened in 2024 Driving the Loss Ratio this High?

It was a really bad hailstorm!

In 2024, a record-breaking hailstorm pummeled the province, causing more than $3.3 billion in total insured losses. Auto insurance alone accounted for about 70,000 claims and roughly $900 million in damage. Events like such ripple through loss ratios for a year or more as claims get processed and paid out.

How Much Have Alberta Premiums Actually Gone Up?

The average annual full-coverage auto insurance premium in Alberta rose 8.7% in 2025, landing at $1,903, up from $1,751 in 2024. Not exactly pocket change. For comparison, Ontario’s average annual premium sits higher, at $2,164. Some drivers experienced increases above the +7.5% Good Driver Rate Cap because they were excluded from the definition of a good driver.

What Does This Mean for Alberta Drivers?

The takeaway: Rising premiums and unprofitable insurers aren’t opposites, they’re two sides of the same coin. When claims costs keep outpacing what’s collected in premium, rate increases become one of the main tools insurers lean on to try to bring the system back into balance. It’s not a great feeling to pay more while hearing insurers are still losing money, but the numbers show it’s not a case of anyone quietly pocketing extra profit. In fact, the AIRB conducts an annual Excess Profit review to ensure insurers are not taking in too much money on Alberta auto insurance.

This is also part of why the province is moving toward something bigger: a new Care-First auto insurance system, designed to improve accident benefits while also addressing ongoing concerns about the affordability and availability of coverage in the province.

Summary:

Although it sounds backwards, it’s true: Alberta auto insurers are still losing money even as premiums go up. According to the Automobile Insurance Rate Board’s (AIRB) 2026 Market and Trends Report, for every $1 collected in premium in 2025, the insurers paid out $1.11 in claims and expenses, despite the average annual premium rising 8.7% that year, to $1,903. Only 2 of the 23 largest insurers in the province turned a profit. The gap between what insurers collect and what they pay out is a major reason rates continue trending upward.

Frequently Asked Questions

Why is my car insurance going up if insurers are losing money? Rate increases are one of the main ways insurers try to close the gap between what’s collected in premiums and what’s paid out in claims and expenses, especially when losses are running above the profitability threshold.

What is a loss ratio in auto insurance? It’s the percentage of every premium dollar an insurer pays out in claims. Alberta’s 2025 loss ratio was 83.6%, meaning insurers paid 84 cents in claims for every $1 in premium collected.

What loss ratio is considered profitable for auto insurers? The AIRB generally considers around 70% to be the baseline threshold for profitability.

How much is the average auto insurance premium in Alberta? The average annual full-coverage premium in Alberta was $1,903 in 2025, up 8.7% from $1,751 in 2024. Some drivers experienced increases above the +7.5% Good Driver Rate Cap because they were excluded from the definition of a good driver.

How does Alberta’s auto insurance premium compare to Ontario’s? Ontario’s average annual premium is higher, at $2,164, though Ontario also currently offers a broader benefits package whichAlberta’s system doesn’t include.

What caused the spike in Alberta auto insurance losses in 2024? A record hailstorm in 2024 caused more than $3.3 billion in total insured losses, including roughly $900 million from about 70,000 auto insurance claims.

What is Alberta’s Care-First auto insurance reform? It’s a new auto insurance system to be launched on January 1, 2027 in Alberta, aimed at  addressing ongoing concerns about the affordability and availability of auto insurance coverage in the province.