Calgary’s recent damaging hailstorm could push auto insurers out of province, industry says

The massive hail storm in Calgary this summer could push more auto insurance companies to leave Alberta unless there are reforms to the rate cap, the industry says.

The Insurance Bureau of Canada (IBC) says $900 million of the $2.8 billion insured losses caused by the early August storm was for damage to vehicles, a hit that comes with the industry already in crisis.

IBC Vice President Aaron Sutherland tells CityNews they need the province to remove the rate cap and bring in reforms to address the underlying cost pressures.

“A big cost pressure in the auto insurance system is the increasing cost of legal fees and litigation trends,” he says. “The province has a direct ability to change those.”

IBC says legal costs have grown a projected 19 per cent, while the cost of auto-theft is up 55 per cent, and the government’s health levy on auto insurers is up a staggering 60 per cent.

“From an insurance perspective, the cost of auto-insurance is now far higher than the price insurers are allowed to charge,” says Sutherland.

Alberta’s UCP government has been exploring no-fault insurance, but Sutherland insists its not entirely the way they want to see it done.

He says the IBC has been putting forward a middle ground that would give drivers more choice around the ability to sue for a minor injury, while preserving that right to sue for serious injuries.

The province is considering a no-fault system that would eliminate the right to sue entirely.

Calgary lawyer Jackie Halpern is with Fair Alberta Injury Regulations (FAIR) and says they’re working with the insurance industry to find solutions outside of no-fault insurance.

“Changes can be made to the system without removing the right to sue completely,” she says. “It can reserve rights so that people who need access to care are still able to get that.”

Halpern says no other provinces have a private system with no-fault insurance.

She says to bring in private no-fault insurance is in essence making it like a WCB-style system where private companies would be determining whether people have benefits or not.

“That’s like giving the fox the keys to the hen house,” she says.

The hailstorm that hit Calgary at the beginning of August is the second most expensive event in Canada’s history.

Alberta has been home to five of the top 10 costliest disasters in Canadian history, all of which have happened in the last eight years. The 2016 Fort McMurray wildfire remains the costliest event in Canadian history.

The Calgary area has seen devastating hailstorms in recent years, including the 2020 and 2021 hailstorms that caused over $1.2 billion and $700 million in insured damage, respectively, the IBC says.

Insured damage from the Jasper wildfire is estimated at $880 million, meaning severe weather has cost insurers over $3.6 billion in Alberta this summer. IBC says in all of 2023, severe weather caused around $3.1 billion in insured damage across the entire country.

With files from Lauryn Heintz