New auto insurance system coming
By Rob Vogt
The provincial government is introducing a new auto insurance system it claims will provide better and faster services to Albertans while reducing auto insurance premiums.
The government announced on Nov. 21 that, after hearing from more than 16,000 Albertans through an online survey about their priorities for auto insurance policies, it is introducing a new privately delivered, care-focused auto insurance system.
Right now, the government said, insurance in the province is not affordable or care focused. Despite high premiums, Albertans injured in collisions do not get the timely medical care and income support they need in a system that is complex to navigate. When fully implemented, Alberta’s new auto insurance system will deliver better and faster care for those involved in collisions, and Albertans will see cost savings up to $400 per year.
“Albertans have been clear they need an auto insurance system that provides better, faster care and is more affordable. When it’s implemented, our new privately delivered, care-centred insurance system will put the focus on Albertans’ recovery, providing more effective support and will deliver lower rates,” said Premier Danielle Smith.
It was noted Albertans who suffer injuries due to a collision currently wait months for a simple claim to be resolved and can wait years for claims related to more serious and life-changing injuries to be addressed. Additionally, the medical and financial benefits they receive often expire before they’re fully recovered.
Under the new system, Albertans who suffer catastrophic injuries will receive treatment and care for the rest of their lives. Those who sustain serious injuries will receive treatment until they are fully recovered.
These changes mirror and build upon the Saskatchewan insurance model, where at-fault drivers can be sued for pain and suffering damages if they are convicted of a criminal offence, such as impaired driving or dangerous driving, or conviction of certain offenses under the Traffic Safety Act.
Work on this new auto insurance system will require legislation in the spring of 2025. In order to reconfigure auto insurance policies for 3.4 million Albertans, auto insurance companies need time to create and implement the new system. Alberta’s government expects the new system to be fully implemented by January 2027.
In the interim, starting in January 2025, the good driver rate cap will be adjusted to a 7.5 percent increase due to high legal costs, increasing vehicle damage repair costs and natural disaster costs. This protects good drivers from significant rate increases while ensuring that auto insurance providers remain financially viable in Alberta.
It was pointed out that Albertans have been clear they still want premiums to be based on risk. Bad drivers will continue to pay higher premiums than good drivers.
By providing significantly enhanced medical, rehabilitation and income support benefits, this system supports Albertans injured in collisions while reducing the impact of litigation costs on the amount that Albertans pay for their insurance.
It was also noted Alberta’s government commissioned two auto insurance reports, which showed that legal fees and litigation costs tied to the province’s current system significantly increase premiums.
A 2023 report by MNP shows a 48 per cent increase in collision-related lawsuits between 2018 and 2022, with litigation costs exceeding $1.2 billion.
On Nov. 25, the province announced it has launched a website, care-first.alberta.ca, on the province’s plans for improved, faster and less expensive auto insurance.
The website focuses on explaining how the new auto insurance system will provide better medical and faster income support benefits. Under a care-focused system, those benefits will last through the full recovery period for Albertans injured in collisions. In addition, Albertans will have cost savings up to $400 per year under the new system.