In recent years, there has been a lot of discussion about the affordability of auto insurance. Affordability is a subjective term, and it is difficult to develop one measure to clearly state whether it is affordable. Unlike like other goods and services Albertans must purchase, there is not a single price everyone pays. Insurance companies individually price auto insurance based on the individual driver, the vehicle and where they drive, which means no two drivers have the same price.

One measure the AIRB has used as a proxy for affordability is the percentage of after-tax income spent on auto insurance premiums. The Automobile Insurance Affordability Report adds Canadian census data to General Insurance Statistical Agency (GISA) data to review affordability ratios.

Some of the report’s findings are:

• While Alberta remains more affordable, Ontario’s affordability is improving while Alberta is worsening.
• The least affordable FSAs are in north and central Edmonton and north east and central Calgary. It was expected for the least affordable areas to be in Alberta’s two largest cities given the traffic density and volume of drivers.
• Auto insurance is more affordable and consistent in rural FSAs. Urban areas face considerable variation in premiums as they are highly segmented compared to rural FSAs.

This report supports the need for broad auto insurance reforms to address auto insurance affordability and stabilization of premiums for Alberta drivers.

In the face of rising unaffordability, we encourage drivers to exhibit safe driving behavior to control their premiums and keep them low, and highly encourage shopping the market, as it can save hundreds or thousands of dollars each year on premiums.

Click here to read the report and learn how to reduce your rates here.