It’s time to axe tax on auto insurance and provide savings to Alberta drivers

Small Business Canada

To help improve affordability for families and businesses across Alberta, the Canadian Federation of Independent Business (CFIB) and Insurance Bureau of Canada (IBC) are calling on the Alberta government to axe two taxes charged on every auto insurance policy as part of the 2024 provincial budget.

Most Albertans are unaware that the province charges drivers a 4% Insurance Premium Tax (IPT) on every driver’s auto insurance policy. The amount of tax collected through the IPT has grown by 28% since 2018, and has resulted in over $1 billion in increased costs to Alberta’s drivers. Removing this tax would provide tangible savings to drivers.

The province also charges a levy on auto insurance to recover health care costs, and this is set to increase by 28% in 2024. This levy is added to the cost of auto insurance premiums, and is rising to $86.8 million this year.

Combined, these two taxes add approximately $100 to every driver’s insurance policy each year.

“Alberta’s auto insurance market is under considerable strain due to inflation, severe weather, auto theft and rising legal costs,” said Aaron Sutherland, Vice-President, Pacific and Western, IBC. “IBC is eager to work with the government to undertake reforms to address these costs and improve the affordability of auto insurance. In the interim, we are asking the province to remove – or at the very least pause – the IPT and cost-recovery levy for health care as a way to provide near-term relief to drivers.”

Removing the IPT would also help Alberta business owners, who cited insurance costs as a major input cost constraint for 11 months of 2023, according to CFIB’s Monthly Business Barometer®. In addition, 71% say that insurance costs are the most harmful to their business, second only to utility costs.

“As part of the Throne Speech, the government committed to affordability and insurance reforms that would reduce premium costs,” said Annie Dormuth, CFIB’s Alberta Provincial Affairs Director. “One quick and effective way for the government to fulfil its commitment is to pause or reduce the IPT. Doing so will help Alberta small businesses and families cope with cost increases and inflationary pressures.”

Last November, the government announced a cap on auto insurance rates while it explores long-term solutions to improve the affordability of auto insurance. However, the rate cap does not address the costs underlying coverage and will do little to improve the affordability of auto insurance for drivers. That’s why IBC has put forward its Enhancing Care & Expanding Choice proposal which gives drivers more choice and more control over their coverage, while doubling the care provided to those injured in collisions. It could save drivers up to $200 on average, in addition to any savings provided by removing the IPT and health levy.

For more information on Alberta auto insurance and IBC’s Enhancing Care & Expanding Choice proposal, visit

About Insurance Bureau of Canada

Insurance Bureau of Canada (IBC) is the national industry association representing Canada’s private home, auto and business insurers. Its member companies make up the vast majority of the property and casualty (P&C) insurance market in Canada. For more than 50 years, IBC has worked with governments across the country to help make affordable home, auto and business insurance available for all Canadians. IBC supports the vision of consumers and governments trusting, valuing and supporting the private P&C insurance industry. It champions key issues and helps educate consumers on how best to protect their homes, cars, businesses and properties.

For media releases and more information, visit IBC’s Media Centre at Follow us on X (formerly Twitter) @InsuranceBureau and like us on Facebook. If you have a question about home, auto or business insurance, contact IBC’s Consumer Information Centre at 1-844-2ask-IBC.

About CFIB

The Canadian Federation of Independent Business (CFIB) is Canada’s largest association of small and medium-sized businesses with 97,000 members (10,000 in Alberta) across every industry and region. CFIB is dedicated to increasing business owners’ chances of success by driving policy change at all levels of government, providing expert advice and tools, and negotiating exclusive savings. Learn more at

SOURCE Insurance Bureau of Canada

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