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Auto Insurance Reform Needed in Alberta: DBRS

Auto Insurance Reform Needed in Alberta: DBRS

A major international credit rating agency says Alberta must come up with a “clear long-term solution” to its auto insurance woes or more insurers will leave the province.

DBRS Morningstar expects other insurers to follow the lead of Sonnet and Aviva subsidiary S&Y, both of which recently announced plans to phase out their auto insurance operations in Alberta.

DBRS adds that even those with no plans to exit the market may be implementing cost-cutting measures that reduce the accessibility and availability of auto insurance in the province.

Alberta auto insurers say they are struggling with claims costs that have been higher than premiums in the province for years.

Part of the problem, they say, is the sky-high litigation costs in Alberta’s tort-based system, which allows crash victims who sustain both minor and serious injuries to sue the at-fault driver’s insurance company.

The Alberta government is currently in the process of overhauling the province’s auto insurance system with the aim of creating a “simpler, more affordable and more stable insurance system.”


This report by The Canadian Press was first published July 10, 2024.