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Calgary Herald
a day ago
- Automotive
- Calgary Herald
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.
Cision Canada
5 days ago
- Automotive
- Cision Canada
Report finds including limited right to sue in new Alberta auto insurance model could cost drivers up to $136 annually
EDMONTON, ON, June 24, 2025 /CNW/ - A new analysis from consulting firm MNP finds that the government's intention to maintain the ability to sue in Alberta's Care-First auto insurance model could add up to $136 to required premiums annually. In light of the findings, Insurance Bureau of Canada (IBC) is urging the government to resist pressure to keep tort access in the new system and instead stay focused on ensuring victims receive the highest level of care to support their recovery. "Litigation in Alberta's auto insurance system creates significant costs for Alberta drivers. Removing this, to improve affordability and care, is the main reason the government decided to transition to its Care-First model," said Aaron Sutherland, Vice-President, Pacific and Western, Insurance Bureau of Canada (IBC). "The provincial government designs and mandates the auto insurance products that insurers must sell. No other province with a care-based system permits the ability to sue as envisioned in Alberta because of the significant costs it adds for drivers, while doing nothing to improve care for those injured in collisions." As the Alberta government moves forward with the final design of its new Care-First auto insurance system, it has indicated that those injured in collisions will retain the ability to sue when the at-fault driver is guilty of select Criminal Code and Traffic Safety Act violations, as well as to recover out-of-pocket expenses beyond what is covered by their own insurance policy. IBC commissioned MNP to explore the impact this would have on required premiums. The firm's findings can be found here. After years of escalating legal costs and government-imposed rate interventions, Alberta's auto insurance market is in crisis. Soaring repair costs, inflation and tariffs are only adding to the pressure. Now, with the government's intention to allow tort access to continue as a cost pressure, the success of Alberta's Care-First model is at risk—eroding the savings that drivers could see when the new system comes into effect in 18 months. "Drivers deserve an auto insurance system that they can count on when they need it," added Sutherland. "IBC and its members are eager to work with the government to stabilize the system today and ensure the new system brings drivers savings and the access to the best medical benefits so that they can recover." The Alberta government's Automobile Insurance Rate Board (AIRB) recently published new data on cost pressures impacting driver premiums over the next year, all of which are growing well in excess of the current 7.5% auto insurance rate cap: Legal costs are increasing 9.7% Accident benefit costs are increasing 11.9% Over the last year, costs for vehicle damage coverages were projected to increase by more than 15%. The AIRB also highlighted that last year auto insurers lost 20 cents for every dollar sold in premiums due to the government's ongoing rate cap. This is creating significant strain on the availability of coverage for drivers today and on the ability of the Care-First system to deliver savings for drivers in the future. "The Alberta government is trying to deliver significant savings under the new system, but current auto insurance rates are under tremendous pressure," said Sutherland. "The insurance industry supports the government's goal of making auto insurance more affordable for Alberta drivers. But to do that, a significant course correction is needed." About Insurance Bureau of Canada Established in 1964, Insurance Bureau of Canada (IBC) is the national industry association representing Canada's private home, auto and business insurers. Its member companies make up the vast majority of Canada's highly competitive property and casualty (P&C) insurance market. As the leading advocate for Canada's private P&C insurers, IBC collaborates with governments, regulators and stakeholders to support a competitive environment for the P&C insurance industry to continue to help protect Canadians from the risks of today and tomorrow. IBC believes that Canadians value and deserve a responsive and resilient private P&C insurance industry that provides insurance solutions to both individuals and businesses. For media releases, IN Focus articles, or to book an interview with an IBC representative, visit Follow us on LinkedIn, X and Instagram, and like us on Facebook. If you have a question about home, auto or business insurance, contact IBC's Consumer Information Centre at 1-844-2ask-IBC. We're here to help.
