Calgary, Alberta — The Insurance Bureau of Canada (IBC) is warning that more automotive insurers could be pushed out of the province following an August hailstorm that resulted in $900 million in unexpected claims costs pressures.
Specifically, Aaron Sutherland, IBC’s vice president for the Pacific and Western area explained in a media release that costs come “a time when Alberta’s auto insurance system is in crisis due to the province’s rate cap.”
Sutherland continued that “under the rate cap, auto insurers are unable to recover from the growing cost of claims over the past two years. This has created a dire economic environment that has forced several companies to leave Alberta’s auto insurance market, limiting competition and choice for consumers.”
“Unless the rate cap is removed, the high number of new claims from the hailstorm will contribute to Alberta’s already tenuous market conditions, which may result in more insurance carriers making a similar exit from the market.”
Overall, the Calgary hailstorm that occurred in August—which saw chicken egg-sized hailstones falling onto vehicles and property—created more than 130,000 insurance claims and about $2.8 billion in damage.
The IBC notes that more than half of those claims—about 70,000—resulted in estimated claims payments for vehicle damage alone for $900 million.
For Alberta insurers, reports the IBC, the storm happened at a time when the province’s private auto market is already unprofitable, and this, for insurers, is due, in part, to the province’s 3.7 percent cap on auto rate increases.
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