Alberta's proposed care-first auto insurance could add $136 in annual premiums: report
A new analysis by MNP consulting firm found Alberta's proposed care-first auto insurance system may not deliver on the $400 savings as promised.
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Premier Danielle Smith in November of last year announced the province will overhaul the auto insurance system in 2027 to a no-fault system boasting lower premiums, the country's most generous benefits package while maintaining a right-to-sue.
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The estimated cost of tort-access as proposed in the model could add up to $218 annually to premiums, while limiting the ability to sue to a select set of Criminal Code and Traffic Safety Act provisions as well as economic losses higher than the coverage limits could still cost drivers an extra $136 in annual premiums.
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'And when you add in the increased cost of tariffs, other inflationary pressures which can't be accounted for today due to the rate cap, it's becoming increasingly unlikely that drivers are going to see savings when the care-first model is adopted,' Aaron Sutherland, IBC's vice-president for Western and Pacific Canada said.
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Under the new model, car accident victims would be paid by their own insurers at compensation rates set by the government, instead of suing parties responsible for injury.
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In November, Smith said the changes would minimize costs and time lost in legal claims and prioritize care for accident victims.
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The province has modelled its system on those seen in B.C, Saskatchewan and Manitoba — but those systems have 'eliminated the right to sue,' Sutherland said. 'Having pulled those costs out, they've used those to expand the benefits people get to recover and improve the price they're paying.'
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The report stated the province based its savings estimates on adopting Manitoba's model, wherein drivers can only sue for property damage.
'Alberta, it sounds like, isn't going to be pulling out the ability to sue to the same degree and that means that those cost savings simply won't be there,' Sutherland said.
Allowing for tort access to recoup any losses income that exceed coverage limits would result in a four-to-nine per cent increase in driver premiums, the report stated. For traffic and criminal code violations, the more flexible the tort access, the higher the premiums.
Until the new system is launched, insurers will be able to raise the rates for good drivers up to 7.5 per cent each year, which includes a 2.5 per cent rider to cover costs for natural disasters like hail storms and wildfires.
IBC: Rate-cap stifling competition
The rate cap, according to Sutherland, impedes an insurer's ability to compensate for rising costs, innovate and remain in healthy market competition.
'It's driving competition away,' he said. 'It's not improving affordability. For many drivers, if they've got to find a new insurer, they're actually seeing their price grow quite dramatically.'
The province, he added, is yet to reveal any details of what the system is set to look like when it comes to fruition, which makes analyzing any actual outcomes difficult and uncertain.
'There's still much that remains to be seen,' he said.
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Calgary Herald
7 hours ago
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Alberta's proposed care-first auto insurance could add $136 in annual premiums: report
A new analysis by MNP consulting firm found Alberta's proposed care-first auto insurance system may not deliver on the $400 savings as promised. Article content Premier Danielle Smith in November of last year announced the province will overhaul the auto insurance system in 2027 to a no-fault system boasting lower premiums, the country's most generous benefits package while maintaining a right-to-sue. Article content Article content Article content The estimated cost of tort-access as proposed in the model could add up to $218 annually to premiums, while limiting the ability to sue to a select set of Criminal Code and Traffic Safety Act provisions as well as economic losses higher than the coverage limits could still cost drivers an extra $136 in annual premiums. Article content 'And when you add in the increased cost of tariffs, other inflationary pressures which can't be accounted for today due to the rate cap, it's becoming increasingly unlikely that drivers are going to see savings when the care-first model is adopted,' Aaron Sutherland, IBC's vice-president for Western and Pacific Canada said. Article content Article content Under the new model, car accident victims would be paid by their own insurers at compensation rates set by the government, instead of suing parties responsible for injury. Article content Article content In November, Smith said the changes would minimize costs and time lost in legal claims and prioritize care for accident victims. Article content The province has modelled its system on those seen in B.C, Saskatchewan and Manitoba — but those systems have 'eliminated the right to sue,' Sutherland said. 'Having pulled those costs out, they've used those to expand the benefits people get to recover and improve the price they're paying.' Article content The report stated the province based its savings estimates on adopting Manitoba's model, wherein drivers can only sue for property damage. 'Alberta, it sounds like, isn't going to be pulling out the ability to sue to the same degree and that means that those cost savings simply won't be there,' Sutherland said. Allowing for tort access to recoup any losses income that exceed coverage limits would result in a four-to-nine per cent increase in driver premiums, the report stated. For traffic and criminal code violations, the more flexible the tort access, the higher the premiums. Until the new system is launched, insurers will be able to raise the rates for good drivers up to 7.5 per cent each year, which includes a 2.5 per cent rider to cover costs for natural disasters like hail storms and wildfires. IBC: Rate-cap stifling competition The rate cap, according to Sutherland, impedes an insurer's ability to compensate for rising costs, innovate and remain in healthy market competition. 'It's driving competition away,' he said. 'It's not improving affordability. For many drivers, if they've got to find a new insurer, they're actually seeing their price grow quite dramatically.' The province, he added, is yet to reveal any details of what the system is set to look like when it comes to fruition, which makes analyzing any actual outcomes difficult and uncertain. 'There's still much that remains to be seen,' he said.
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