Sonnet Insurance has announced its decision to withdraw from the Alberta auto insurance market, citing unsustainable financial losses. The digital insurance company, owned by Economical Insurance, will no longer offer auto insurance policies in the province as of May 2020.
In a statement released on Monday, Sonnet CEO, Mike Dobbins, expressed the company’s disappointment in having to make this difficult decision. He stated that despite their efforts to provide competitive rates and innovative products, the company has been unable to achieve profitability in the Alberta auto insurance market.
This news comes as a surprise to many, as Sonnet had only entered the Alberta market in 2017. At the time, the company had high hopes for success, with its fully digital platform and promise of convenience for customers. However, the reality of the highly competitive and volatile auto insurance market in Alberta proved to be a challenge for Sonnet.
According to Economical Insurance, Sonnet’s parent company, the decision to withdraw from Alberta was made after a thorough review of the company’s financial performance. The company reported a net loss of $17.5 million in the third quarter of 2019, with a significant portion of that loss attributed to the Alberta market.
This withdrawal will affect approximately 2,000 Sonnet customers in Alberta, who will need to find alternative insurance options before May 2020. Sonnet has assured its customers that their policies will remain in effect until their renewal date, and they will receive a full refund for any unused portion of their policy.
The Insurance Bureau of Canada (IBC) has expressed concern over Sonnet’s decision, stating that it highlights the challenges faced by insurance companies in the Alberta market. The IBC has called for government action to address the rising costs of auto insurance in the province, which has led to several companies pulling out of the market in recent years.
In the meantime, Sonnet will continue to offer home and travel insurance policies in Alberta, and the company remains committed to its other markets across Canada. Sonnet’s withdrawal from the Alberta auto insurance market serves as a reminder of the complexities and challenges faced by insurance companies in providing affordable and sustainable coverage for customers.
