Another insurer is backing away from Alberta’s auto insurance coverage market.
Sonnet Insurance coverage Firm introduced yesterday it can section out its auto insurance coverage operations in Alberta. The Definity subsidiary mentioned Dec. 13, 2024, can be its supposed date of withdrawal, upon which it can not situation new or renewal auto insurance policies in Alberta.
“Restricted alternatives for Sonnet to develop profitably within the present auto insurance coverage working surroundings in Alberta have been a key consideration in making this choice,” the corporate mentioned in a press launch.
“This choice will permit Sonnet to proceed to focus its efforts on profitably rising Sonnet’s auto insurance coverage enterprise in different areas throughout Canada,” Paul MacDonald, govt vice-president of non-public insurance coverage and digital channels, instructed Canadian Underwriter in a press release.
The corporate mentioned it can notify its Alberta auto insurance coverage prospects impacted by the withdrawal.
“We may also proceed to supply insurance coverage by way of Economical Insurance coverage, supplied by Definity Insurance coverage Firm, by way of our valued dealer companions,” MacDonald mentioned.
Sonnet says its withdrawal from Alberta’s auto market is not going to impression its dwelling insurance coverage enterprise within the province.
Fee pressures
Definity president and CEO Rowan Saunders previously explained the corporate’s auto guide is “not price enough” in Alberta, throughout in an earnings name in Could 2023.
Saunders made the remark whereas the earlier price pause, applied by the United Conservative Occasion of Alberta, was in impact. That cap prohibited insurers from elevating charges till the top of 2023. The UCP has since renewed the speed cap for “good drivers” in Alberta, efficient January 2024, for an indeterminate interval. (Alberta’s regulator estimates about 75% of Alberta drivers qualify as “good,” per the rate cap qualifications.)
On the time, Saunders mentioned Sonnet’s auto guide of enterprise in Alberta, at about $80 million, represents solely 2% of Definity’s whole portfolio. “We’re very dedicated to not deploying capital right into a line of enterprise the place there’s a price freeze and we’re not price enough,” he mentioned within the Could 2023 earnings name.
The Insurance coverage Bureau of Canada, which represents insurers nationally, has warned authorities intervention within the auto insurance coverage system would trigger insurers to wrestle to stay worthwhile. “Some insurers have now lowered the variety of insurance policies they promote and tightened coverage situations,” IBC mentioned in a current release.
“Claims prices now exceed the amount of cash insurers are accumulating in premiums due to the auto insurance rate cap in Alberta,” Aaron Sutherland, vice chairman of IBC’s Western and Pacific areas said.
“In consequence, insurers are being pressured to cut back their choices to stay viable, and that is making it harder for a lot of drivers to safe the protection they want. Reform is required urgently, and because the authorities considers numerous options to scale back premiums for drivers it’s crucial that it addresses these price pressures.”
Characteristic photograph courtesy of iStock.com/helivideo
