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2 firms offering auto insurance to pull out of Alberta market

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Two insurance providers in Alberta have announced plans to stop offering automobile insurance to customers in Alberta.

Aviva Canada on Wednesday said it intends to phase out its home and auto insurance business through Aviva Direct, its direct-to-consumer business, in the province starting in January.

"We had to make the difficult decision to exit as the current environment in Alberta doesn’t foster growth,” Susan Penwarden, Aviva Canada's managing director for personal lines, said in a statement.

Aviva Canada said costs of claims "for many years" have surpassed the premiums they've collected in the province, adding that the cost of litigation is the biggest factor in raising auto insurance premiums in Alberta.

Aviva Direct home and auto insurance is underwritten by S&Y Insurance.

The news comes almost three weeks after Sonnet Insurance said it would stop offering auto insurance coverage in Alberta in mid-December. Customers with Sonnet home insurance policies are not affected.

In a media release June 13, Sonnet said "limited opportunities ... to grow profitably in the current auto insurance operating environment in Alberta were a key consideration in making this decision."

Paul MacDonald, Sonnet executive vice-president for personal insurance, said in a statement the company "will continue to focus its efforts to profitably grow its auto insurance business in other regions in Canada."

Zenith Insurance, which was selling auto insurance policies through Costco, left the Alberta market last year.

Lori Williams, an associate professor of policy studies at Mount Royal University in Calgary, said fewer companies offering insurance products means higher prices for consumers.

"Competition is supposed to have advantages, including greater affordability for those who are buying the goods or consuming the goods in question, and that hasn't been working out," Williams told CTV News Edmonton on Friday.

"Those insurance rates are just becoming one of many things that add to the affordability crisis that many Canadians feel that they're struggling under."

Williams said Albertans are paying some of the highest insurance rates in Canada and the highest utility rates nationally, impacting their personal budgets.

"This so-called Alberta Advantage is certainly not being felt when it comes to insurance and utility bills, so here, we've got a real problem in that competition is meant to ensure that the best value is provided to consumers," she said.

"What we're seeing instead is insurance companies, either looking at the uncertainty of the market or the difficulty of getting a return on their investments, deciding they don't want to participate in this market anymore."

Williams said affordability "is top of mind" in Alberta given the impact of inflation over an extended period of time and with more people relocating to the province.

"I don't think it much matters to most folks how things are made affordable, whether it's the free market or government assistance, subsidies or regulation of a particular industry," she said.

"What they want is an affordable life, something that makes it possible to actually pay the bills month to month, and increasingly not just Albertans but Canadians are facing challenges with affordability." 

Justin Brattinga, Alberta's treasury board and finance press secretary, said in a statement to CTV News Edmonton the ministry is "working on long-term reforms to make sure Albertans have access to affordable insurance and to stabilize and sustain the auto insurance industry."

Brattinga said a provincial survey on auto insurance taken by 16,000 people closed June 26, the results of which are now under ministry analysis.

With files from CTV News Edmonton's Chelan Skulski