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Alberta’s rate cap is deepening financial losses in the province’s auto insurance market, industry experts say, as a new report found auto insurers lost more than $1.2 billion in 2024.

The latest annual report from Alberta’s superintendent of insurance, released last month, cited the Calgary hailstorm and the Jasper wildfire as major factors driving the loss.

As a result, the Insurance Bureau of Canada (IBC), the national industry association, said insurers had to pay out 18 per cent more in claims than drivers paid in premiums. About 35 auto insurers in Alberta suffered a financial loss that year.

“The superintendent expects this pressure on Alberta’s automobile insurance profitability and stability to continue through 2025,” the annual report says.

Aaron Sutherland, IBC’s vice-president of Pacific and Western regions, said provincially regulated rate caps and high legal costs are factors that make it difficult for insurance companies to operate in the province.

“We’ve seen multiple insurance companies forced to leave Alberta. That means less competition, less choice, and the insurers that remain here are restricting the sale of coverage,” Sutherland said.

“It’s not improving affordability. In fact, it’s doing the opposite and it’s making auto insurance much more difficult to secure at a time when it’s needed the most.”

The provincial government introduced the “good driver rate cap” in 2024, limiting the amount insurance premiums can go up in a given year.

The cap was initially set around 3.7 per cent, then increased to 7.5 per cent in 2025.

The annual report forecasts escalating claims costs will continue to exceed that cap due to inflation, growing severity of bodily injury claims, vehicle theft rates and weather-related losses.

“[The rate cap] pales in comparison to the growth and cost pressures underneath coverage —  legal costs, the cost of theft, the cost of natural disasters like hail events, those are going up well in excess of that,” he said.

“With the cost of delivering coverage growing far faster than the price you’re able to charge, that simply isn’t sustainable.”

Those observations ring true for Heather Mack, manager of education and engagement with the Alberta Automobile Insurance Rate Board, which sets auto insurance rates in the province.

She said the biggest cost driver in auto insurance in Alberta is third-party liability or bodily injury — when the driver who isn’t at fault sues the other to compensate for things like medical costs and property damages.

“We’ve seen a huge spike in the size of these awards — and it’s not money that’s definitely going to medical and rehab. [They are] significant legal awards and it’s driving up the cost of insurance for everyone,” Mack said.

In a statement to CBC News, the Ministry of Treasury Board and Finance listed inflation, legal fees, more vehicle thefts, weather-related losses and tariffs as factors putting pressure on Alberta’s auto insurance market.

Its list excluded the rate cap.

New insurance model planned

The Alberta government plans to implement the Care-First insurance model in 2027, which would settle the majority of injury claims without going to court.

The system would resemble the publicly delivered “no-fault” systems in Manitoba, Saskatchewan and British Columbia, but it would be delivered by private insurers.

The government’s announcement has been met with mixed messages. Some critics have said dangerous drivers would face less accountability and leave few options for drivers who have been injured in collisions.

But Mack said, if done right, the new system would prioritize recovering people faster, “without lengthy delays and lawsuits being required,” while stabilizing the cost of auto insurance for all drivers.

“That’s going to take a bit of a culture change, especially on the industry side,” she said, adding that the current system takes more of an adversarial approach.

NEW YORK (AP) — Reviving a campaign pledge, President Donald Trump wants a one-year, 10% cap on credit card interest rates, a move that could save Americans tens of billions of dollars but drew immediate opposition from an industry that has been in his corner.

READ MORE: The economy is giving mixed signals. Here’s what experts say they mean

Trump was not clear in his social media post Friday night whether a cap might take effect through executive action or legislation, though one Republican senator said he had spoken with the president and would work on a bill with his “full support.” Trump said he hoped it would be in place Jan. 20, one year after he took office.

Strong opposition is certain from Wall Street in addition to the credit card companies, which donated heavily to his 2024 campaign and have supported Trump’s second-term agenda. Banks are making the argument that such a plan would most hurt poor people, at a time of economic concern, by curtailing or eliminating credit lines, driving them to high-cost alternatives like payday loans or pawnshops.

“We will no longer let the American Public be ripped off by Credit Card Companies that are charging Interest Rates of 20 to 30%,” Trump wrote on his Truth Social platform.

Researchers who studied Trump’s campaign pledge after it was first announced found that Americans would save roughly $100 billion in interest a year if credit card rates were capped at 10%. The same researchers found that while the credit card industry would take a major hit, it would still be profitable, although credit card rewards and other perks might be scaled back.

About 195 million people in the United States had credit cards in 2024 and were assessed $160 billion in interest charges, the Consumer Financial Protection Bureau says. Americans are now carrying more credit card debt than ever, to the tune of about $1.23 trillion, according to figures from the New York Federal Reserve for the third quarter last year.

Further, Americans are paying, on average, between 19.65% and 21.5% in interest on credit cards according to the Federal Reserve and other industry tracking sources. That has come down in the past year as the central bank lowered benchmark rates, but is near the highs since federal regulators started tracking credit card rates in the mid-1990s. That’s significantly higher than a decade ago, when the average credit card interest rate was roughly 12%.

WATCH: Rising prices push many Americans further into credit card debt

The Republican administration has proved particularly friendly until now to the credit card industry.

Capital One got little resistance from the White House when it finalized its purchase and merger with Discover Financial in early 2025, a deal that created the nation’s largest credit card company. The Consumer Financial Protection Bureau, which is largely tasked with going after credit card companies for alleged wrongdoing, has been largely nonfunctional since Trump took office.

In a joint statement, the banking industry was opposed to Trump’s proposal.

“If enacted, this cap would only drive consumers toward less regulated, more costly alternatives,” the American Bankers Association and allied groups said.

Bank lobbyists have long argued that lowering interest rates on their credit card products would require the banks to lend less to high-risk borrowers. When Congress enacted a cap on the fee that stores pay large banks when customers use a debit card, banks responded by removing all rewards and perks from those cards. Debit card rewards only recently have trickled back into consumers’ hands. For example, United Airlines now has a debit card that gives miles with purchases.

The U.S. already places interest rate caps on some financial products and for some demographics. The Military Lending Act makes it illegal to charge active-duty service members more than 36% for any financial product. The national regulator for credit unions has capped interest rates on credit union credit cards at 18%.

Credit card companies earn three streams of revenue from their products: fees charged to merchants, fees charged to customers and the interest charged on balances. The argument from some researchers and left-leaning policymakers is that the banks earn enough revenue from merchants to keep them profitable if interest rates were capped.

“A 10% credit card interest cap would save Americans $100 billion a year without causing massive account closures, as banks claim. That’s because the few large banks that dominate the credit card market are making absolutely massive profits on customers at all income levels,” said Brian Shearer, director of competition and regulatory policy at the Vanderbilt Policy Accelerator, who wrote the research on the industry’s impact of Trump’s proposal last year.

There are some historic examples that interest rate caps do cut off the less creditworthy to financial products because banks are not able to price risk correctly. Arkansas has a strictly enforced interest rate cap of 17% and evidence points to the poor and less creditworthy being cut out of consumer credit markets in the state. Shearer’s research showed that an interest rate cap of 10% would likely result in banks lending less to those with credit scores below 600.

The White House did not respond to questions about how the president seeks to cap the rate or whether he has spoken with credit card companies about the idea.

Sen. Roger Marshall, R-Kan., who said he talked with Trump on Friday night, said the effort is meant to “lower costs for American families and to reign in greedy credit card companies who have been ripping off hardworking Americans for too long.”

Legislation in both the House and the Senate would do what Trump is seeking.

Sens. Bernie Sanders, I-Vt., and Josh Hawley, R-Mo., released a plan in February that would immediately cap interest rates at 10% for five years, hoping to use Trump’s campaign promise to build momentum for their measure.

Hours before Trump’s post, Sanders said that the president, rather than working to cap interest rates, had taken steps to deregulate big banks that allowed them to charge much higher credit card fees.

Reps. Alexandria Ocasio-Cortez, D-N.Y., and Anna Paulina Luna, R-Fla., have proposed similar legislation. Ocasio-Cortez is a frequent political target of Trump, while Luna is a close ally of the president.

Seung Min Kim reported from West Palm Beach, Fla.