Alberta fines car insurance firms $3.1 million for overcharging

• Alberta’s Superintendent of Insurance has levied $3.1 million in fines for auto insurance overcharging
• It noted it was due to accidental overcharging, but those errors have increased since 2016
• The province plans to move to a “no-fault” insurance system in 2027, capping compensation for injured crash victims

A new report from Alberta’s Superintendent of Insurance reveals that 21 auto insurers in the province have been fined a total of more than $3.1 million for overcharging their customers. The fines covered issues between 2022 and 2024. The department had previously levied $1.99 million in fines to 16 insurers between 2010 and 2021 for overcharging customers. These were all deemed to be accidental overcharges, and customers were reimbursed with interest.

The closer look at premiums, starting in 2022, was because the Superintendent noted “a significant increase in the frequency and severity of automobile insurance premium overcharges” starting in 2016, according to its report.

For the most recent report, the department took a particularly close look at insurers that had overcharged in the past; and at insurance companies’ procedures for their policies, controls, and governance put in place for their automobile insurance rating, meant to help prevent overcharging.

The report looked at 48 insurance providers; and 27 of them disclosed “previously unreported rating errors” resulting in customers being overcharged. As before, all were determined to be “accidental in nature,” and that the companies reimbursed their customers with interest — but even if it’s not done intentionally, the fine can rise if the insurance company takes its time fixing the problem or sending refunds to its customers.

The fines, totalling $3,112,500, were spread across 21 of the providers. Six escaped penalties because the Superintendent determined that “the impact on consumers was very low.”

Reasons for overcharging included incorrectly applying discounts and surcharges; credit score errors; changes or upgrades to the insurance provider’s software systems; errors made when uploading rate tables into the system; and charging drivers twice on surcharges for traffic convictions.

The Superintendent indicated it will continue to monitor insurance rates going forward, but that’s not enough for FAIR Alberta, an advocacy group that includes consumers, medical professionals, and the legal community. It was formed, it says, “to provide a voice to counter the powerful insurance industry lobby, and to advocate for more consumer protections in Alberta’s auto insurance market.”

The fact insurers have been caught and fined for overcharging Albertans should set off alarm bells, yet this is the same industry that will now be given even more control under a no-fault insurance regime

—Jackie Halpern, spokesperson for FAIR Alberta

In a press release, FAIR said the new report “marks yet another chapter in a long history of auto insurers charging premiums above the approved rates set by Alberta’s insurance regulator.”

The coalition noted the Alberta government plans to adopt a no-fault insurance model in January 2027, replacing its current at-fault system. Under the new plan, there will be a higher cap on rate hikes for good drivers; and those injured in crashes would be compensated by their own insurance companies at rates set by the government, without the ability to sue the parties responsible for the crash and resulting injury.

In announcing the change, Alberta premier Danielle Smith said the changes will minimize the cost and time of legal claims, prioritize care for crash victims, and is expected to save drivers up to $400 a year in premiums. At the moment, as of January 2025, insurance companies can raise their rates for good drivers up to 7.5% per year until the no-fault plan kicks in, to help with the rising legal costs and payouts that insurers face now. The previous cap was 3.7%.

Jackie Halpern, spokesperson for FAIR Alberta, said in the release that, “The fact that insurers have been caught and fined for overcharging Albertans should set off alarm bells, yet this is the same industry that will now be given even more control under a no-fault insurance regime.” FAIR added that consumers will “lose key protections, including the right to challenge unfair denials or seek legal recourse against no-fault drivers through the court system.”

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