Edmonton, Alberta -- The Insurance Bureau of Canada is warning that escalating trade tensions with the U.S. are exacerbating Alberta's already strained auto insurance market, leading to higher repair costs and potential reductions in coverage availability.
In a statement released June 5, 2025, the IBC highlighted that recent tariffs are contributing to increased vehicle repair and replacement expenses. A Deloitte analysis commissioned by the IBC found that 25 percent tariffs imposed by the U.S., and reciprocated by Canada, could raise the price of new vehicles and replacement parts by up to 10.9 percent for most insurers. These cost increases could, in turn, impact insurance premiums for Alberta drivers by up to 5 percent.
Aaron Sutherland, vice-president, Pacific and Western for the IBC, stated, "There is a lot of confusion surrounding tariffs, but the reality is they are here and are adding significant cost pressures to vehicle repairs and replacements that were completely unforeseen when the government extended the auto insurance rate cap last fall."
The IBC also pointed to additional cost pressures identified by the Alberta government's Auto Insurance Rate Board. The AIRB's latest Semi-Annual Review suggests that over the next year, bodily injury costs will grow an average of 9.1 percent, accident benefits costs will grow an average of 5.5 percent and the cost of vehicle damage claims will grow by approximately 10 percent.
Sutherland emphasized, "New cost pressures created by the trade dispute with the United States are piling on top of other cost pressures in the auto insurance system and creating new challenges for insurers who are paying out more money in claims than they take in through premiums."
The IBC is urging the Alberta government to reconsider the current rate cap to allow insurers to adjust premiums in line with rising costs, ensuring the sustainability of auto insurance coverage for drivers in the province.
The news comes weeks after Alberta legislators voted to move the provincial auto insurance system to a no-fault model.
