Alberta's insurance regulator will not approve any rate increases until insurers relax coverage restrictions imposed on drivers with claims or convictions.
The move follows an October 2025 amendment to Alberta's Automobile Insurance Premiums Regulation. AR 227/2025 broadened the definition of "rating program" to explicitly include the underwriting rules insurers use to accept, decline or restrict coverage, giving the Automobile Insurance Rate Board (AIRB) formal authority it did not previously have. The AIRB followed with Bulletin 08-2025, telling insurers they would not receive approval for further rate hikes until those restrictions were lifted.
The regulation targets a practice that began in early 2024, when insurers started denying optional coverages such as collision and comprehensive to drivers with an at-fault claim in the past six years or a serious conviction in the past four, or forcing them into deductibles of $2,000 or more. Those coverages are typically required for financed or leased vehicles, so affected drivers were left shopping for a new insurer.
The AIRB's newly published 2026 Market and Trends Report shows why the pressure has built. Alberta's average full-coverage premium rose 8.7% in 2025 to $1,903, from $1,751 in 2024, while the industry's private passenger vehicle loss ratio came in at 83.6%, still above the 70% level the AIRB treats as the break-even point for insurer profitability. The industry's return on premium was -8.8% for the year. Two insurers notified the province's Superintendent of Insurance they would exit the private passenger vehicle market entirely by the end of 2025.
Alberta has leaned on rate caps to manage the fallout. A Ministerial Order effective January 25, 2023, froze approvable increases at 0.0% for individual policyholders through the end of that year. A second order, the Good Driver Rate Cap, took effect January 1, 2024, and limited increases for qualifying drivers to 3.7% in 2024 and 7.5% in 2025. The AIRB says neither cap addresses the underlying cost pressures behind rising premiums, pointing to a roughly 36% rise in bodily injury claim severity since 2021 as the main driver.
Alberta is set to replace its tort-based system with Care-First on January 1, 2027, shifting toward enhanced medical, rehabilitation and income-replacement benefits. The Grid Rating System, which capped premiums for younger drivers, will be repealed the same day. The AIRB says it is working with government on the transition to lower combined bodily injury and accident-benefit costs for drivers compared with what they pay today. The full text of the AIRB's 2026 Market and Trends Report is available at https://www.airbfordrivers.ca/market-and-trends-reports/.
