The Alberta government has introduced legislation that would bring the most significant changes to the province’s auto insurance system in its history. The proposed reforms aim to improve care access for drivers injured in collisions while addressing long-standing concerns over affordability and market stability.
The Insurance Bureau of Canada (IBC) welcomed the initiative but warned that without further action, ongoing challenges, including insurer departures and rising claims costs, could continue to strain the market.
The legislation proposes a transition to a care-based system, shifting away from the traditional litigation-heavy approach. This model prioritizes direct benefits for injured drivers, reducing the need for legal action and lowering associated costs.
“Care-based auto insurance systems work by replacing costly legal battles with more efficient access to benefits and improved premiums,” said Aaron Sutherland, vice-president, Pacific and Western, IBC. “The more lawyers are involved in Alberta’s Care-First system, the less likely that drivers will save.”
Proponents of the care-based model point to similar systems in Quebec and international jurisdictions where limiting legal costs has helped stabilize premiums. However, critics argue that restricting legal recourse could disadvantage some drivers with more complex claims.
While the proposed changes are set to take effect in 2027, insurers say immediate issues need to be addressed. For the past three years, Alberta has limited auto insurance rate increases, a policy that insurers argue has contributed to market instability.
The cap, introduced in 2020 as a temporary measure to ease financial pressures on drivers, has since led some insurers to leave the province or reduce coverage options. This has made it more difficult for some motorists to find affordable policies, particularly those with higher-risk profiles.
“This legislation provides a framework for an improved auto insurance system, but further action is needed to fix the challenges in the system today,” Sutherland said. “To bring insurers back to Alberta, the province must end its rate intervention, cut red tape and let the competitive market create conditions for lasting affordability.”
Auto insurance costs have been a growing concern in Alberta, where rates are among the highest in Canada. A 2023 report from Automobile Insurance Rate Board found that Alberta drivers paid an average of $1,578 per year for insurance—significantly more than drivers in provinces with publicly run systems, such as British Columbia and Manitoba.
The government argues that the new care-based model will create a more sustainable and accessible system. However, industry experts say affordability will depend on how the transition is managed and whether regulatory changes encourage insurers to remain in the province.
As Alberta moves forward with these reforms, drivers, insurers, and consumer advocates will be closely watching how the legislation shapes the future of auto insurance in the province.
