Another auto insurer revealed plans to exit the Alberta market this week, with CUMIS General Insurance announcing its coming departure in 2026.
CUMIS, which is a subsidiary of Co-operators General Insurance, said it’s making a “necessary” decision to leave the Alberta market. Its decision is in direct response to “ongoing challenges” in the market, the announcement said, including the rising cost of auto claims.
As a result, CUMIS will no longer offer auto or home insurance in Alberta as of Jan. 1, next year. Existing policy holders will still be covered until their policies expire in 2026.
The CUMIS departure is the latest in a string of insurance providers that have left Alberta over the last two years.
Zenith Insurance stepped away from the market in 2023. A year later, Sonnet did the same, citing “limited opportunities to grow profitably in the current auto insurance environment in Alberta” as a key consideration in its decision.
Less than a month after Sonnet’s announcement, Aviva subsidiary Aviva-Direct also announced plans to phase out its auto and home insurance business in Alberta. Aviva’s announcement pointed to an environment in Alberta that “doesn’t foster growth.”
Market is ‘not financially viable’
As insurers continue to leave Alberta, Aaron Sutherland, a vice-president with the Insurance Bureau of Canada, pointed to the province’s 3.7 per cent rate cap, which came into effect last year, as a challenge for the sector.
While the cap is designed to provide relief for drivers, Sutherland argued it’s led to a more unstable market when insurers can’t earn enough profit relative to investment.
“If the cost is going far higher than the rate cap allows, that is simply not financially viable for any company in the industry to continue operating,” said Sutherland.
“We’ve had several auto insurers forced to leave Alberta, and we’ve got tens of thousands of drivers out there now being forced to find new, often much more expensive coverage from another company, which is running directly counter to what government is hoping to do, which is improve affordability.”
The UCP government has promised changes to lower car insurance premiums for years. Months after it won the 2023 provincial election, it introduced a rate hike cap.
More substantial changes were revealed last November, when the province announced plans to reform auto insurance by switching to a no-fault system. Expected to take effect in 2027, the new system would see insurers pay compensation at rates set by the province, rather than car accident victims taking the party responsible for their injury to court.
The Alberta government believes reducing litigation costs will lead to hundreds of dollars in savings for the average insurance premium. On Wednesday, Alberta Finance Minister Nate Horner said he remained confident the planned reforms would offer stability for insurers and better service for drivers.
“These reforms will ensure Albertans receive better, faster care and will control costs for insurance companies by reducing lengthy and costly court battles. These savings will also provide premium stability for Alberta drivers,” said Horner in an emailed statement.
Horner added that CUMIS represented less than 0.1 per cent of auto insurance policies in Alberta.
Until that reform is introduced, insurers have been allowed to raise rates up to 7.5 per cent per year, beginning this year.
Some insurers still hold a more optimistic view of Alberta’s market. In a July 30 earnings call, Intact Financial’s senior vice-president, Guillaume Lamy, said his company would also like to see the rate cap removed, and that Intact believes the planned reform is tackling the right issues to restore profitability.
Less market choice
While there are still around 35 auto insurance providers in Alberta, according to Sutherland, he warned that as insurance companies leave the province, offering less competition to drivers, it will likely lead to higher premiums in the future.
The string of departures the province has seen in recent years is not a good sign for the market, said Heather Mack, manager of education and engagement with the Automobile Insurance Rate Board.
“Even a smaller insurer pulling out tells us that the market is not healthy, and it really underscores the need for serious reform to the product,” said Mack.
While the companies that have exited Alberta have been smaller players, she noted their absence significantly affects thousands of drivers who now have to search for a new provider, and reduces market choice. With the current rate cap, Mack said finding a new insurer isn’t an easy task with rising premium costs.
“It’s a worrying signal from the market,” said Mack.
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