Soaring auto theft claims strain Alberta's insurance market

Auto theft costs in Alberta surged last year, continuing a dramatic climb over the last three years, placing immense pressure on the province's already strained auto insurance system.

Citing newly released data, the Insurance Bureau of Canada (IBC) said auto theft claims reached $110.3 million in 2024, a 65% increase since 2021.

Calgary and Edmonton were particularly hard hit, experiencing 81% and 79% increases in theft claims, respectively, over the same period. Since 2014, auto theft costs across the province have skyrocketed by 161%, the IBC report added.

Aaron Sutherland, vice-president, Pacific and Western, IBC, urged action as the provincial insurance system is already “under tremendous strain from tariffs, inflation, growing legal costs, and rising vehicle repair and replacement costs.”

This rise in theft costs exacerbates the existing challenges of inflation, escalating legal expenses, and rising vehicle repair and replacement costs.

Sutherland emphasized the urgent need for more measures to combat auto theft, despite the provincial government's initial steps to address the auto theft issue, including only allowing people with an Alberta driver’s licence or ID to register a vehicle for someone else.

Local auto insurers are urging the provincial government to implement several key actions:

• Prohibit Vehicle Information Number (VIN Override Function): Currently, registry agents can override the VIN input system, allowing for the entry of invalid or unconfirmed VINs. This loophole makes it easier to alter vehicle info for fraudulent or theft purposes. Prohibiting this override function would make it significantly harder to "re-VIN" stolen vehicles or export them.
• Update and standardize vehicle bills of sale: Implementing standardized vehicle bills of sale would create a more robust system, making it more difficult to sell stolen or re-VINed vehicles.
• Restrict third-party vehicle registrations to dealerships: Limiting vehicle registrations to licensed dealerships would reduce the risk of fraud by preventing individuals from registering stolen or re-VINed vehicles.
• Implement an insurance validation program (IVP): An IVP would enable law enforcement and provincial auto registries to instantly verify active vehicle insurance, serving as a deterrent to uninsured driving.

Adding to the complexity, Alberta has maintained auto insurance rate freezes or caps below the actual cost of providing coverage for the past three years.

This prolonged government mandate has led to an unsustainable situation where insurers paid out $1.17 in claims and expenses for every $1 earned in premiums in 2024.

This unsustainability has forced insurers to restrict the sale of coverage, making it challenging for many drivers to secure necessary insurance.

The IBC warned that unless rates are allowed to reflect the true cost of coverage, the effectiveness of the "Care-First" auto insurance model, set to launch on January 1, 2027, will be jeopardized.

Furthermore, a report from consulting firm MNP indicates that the government's intention to retain the ability to sue within this new model could add up to $136 to annual premiums, raising questions about potential savings for drivers.