Recently the CBC ran a series of articles about how insurance rates were skyrocketing for Alberta’s live music venues, snow removal contractors, and companies that operate school buses causing significant strain for these businesses.
According to the CBC, Alberta’s smaller school bus contractors are being hit with insurance increases of up to 50% — on top of last year’s 358% increase – for over a 400% increase in just two years. There are hundreds of small companies providing school bus service across Alberta. If insurance rates keep skyrocketing, school bus contractors are warning that they may have to stop operating altogether threatening transportation for children to go to school.
Some snow removal contractors are seeing their insurance rates rise by between 300 and 425%. The CBC spoke with two snow removal contractors. One indicated their premiums had jumped from $8,000 per year to $42,000. Another said theirs increased from $17,000 to $65,000 per year. Generally, snow removal contractors are small businesses run by entrepreneurs. Some contractors have already gone out of business as a result of the insurance increases.
Already hurting from COVID-19 and prolonged shutdowns, some of Alberta’s bars and live music venues are seeing their premiums increase by over 350%. The increases are not just hurting the small business community who own and operate these bars and music venues, but the arts sector and consumers too – who can now expect menu prices and cover charges to rise.
All of this is occurring while some Albertans continue to see increases in their auto insurance premiums with clean driving and accident records.
What gives? Is the insurance industry really hurting and losing money?
FAIR Alberta decided to look into why so many sectors in Alberta are being hit with drastic insurance increases. Surely the insurance industry must be in great peril if its increasing rates so dramatically and forcing some companies out of business.
Insurers must be losing a lot of money, right? No. It’s actually the opposite – insurance companies continue to post billions in profit.
According to the Office of the Superintendent of Financial Institutions, a federal body that posts the most detailed information on insurer profits, Canadian and multinational insurance companies operating in Canada have seen their profits increase substantially in 2021, compared to comparable figures through the third quarter of prior years (see chart below).
After-tax profit for the insurance industry in the first nine months of 2021 is $6.5 billion. Since 2018, the insurance industry has made billions in profit each year totalling almost $9.5 billion from the period of 2018 to 2021.
Skyrocketing insurance rates alongside skyrocketing premiums raise some questions. How many billions in profit does the insurance industry want? And how many small businesses, entrepreneurs, and public services are they willing to jeopardize to get it?