Ontario auto insurance is profitable, Alberta not so much
Published: March 30, 2019
Updated: April 1, 2019
Author: Luke Jones
CATEGORY: Car Insurance
Despite the auto insurance system in Ontario being viewed as broken by most, Canada’s Property and Casualty Insurance Compensation Corporation says the industry in the province is profitable. However, the loss ratios being observed in Alberta and two Maritime provinces are not sustainable, the corporation adds.
“Importantly for insurers, Ontario’s private passenger auto insurance market remained profitable with a loss ratio of 73.0 percent,” wrote Grant Kelly, PACICC’s chief economist and vice president of financial analysis and regulatory affairs.
Ontario’s auto insurance system is facing numerous problems, including insurance fraud, rising claims costs, and increased distracted and impaired driving. Customers are paying over the odds for coverage in the province, especially in the Greater Toronto Area.
Despite these hurdles, the industry in Ontario has managed to stay profitable. The same cannot be said for Alberta, Nova Scotia, and New Brunswick.
“Claims costs in Canada’s other auto markets are increasing. Auto loss ratios in New Brunswick, Nova Scotia and Alberta are unsustainable,” Kelly wrote in Solvency Analysis, an article in the march 2019 issue of Solvency Matters.
Insurers in Alberta has been unable to increase rates by more than 5% since 2017 when NDP Finance Minister Joe Ceci capped rate increases. PACICC says the restriction is unsustainable as claims costs continue to rise and insurance companies in the province are losing money.
Celyeste Power, vice president of the western region of the Insurance Bureau of Canada (IBC) confirms insurers are feeling the pinch in Alberta. She points out companies are paying our $1.28 for every dollar they earn. Incidentally, the IBC has recently tried to argue in favour of British Columbia adopting an Alberta-type public/private insurance market.