Alberta's New 'Care-First' Auto Insurance Model: Projected Premium Savings and Implementation Details
Albertans may soon see promised savings on their auto insurance premiums with the introduction of a new "care-first" model. The Automobile Insurance Rate Board (AIRB) commissioned a report by Oliver Wyman, which projected a realized premium savings of $259 under the new system. The province passed legislation to implement the privately delivered "care-first" auto insurance system, set to start on Jan. 1, 2027, limiting legal action for Albertans except in specific cases.
Over the past decade, the average insurance premium for Albertans has increased by 57%, reaching $1,817 in 2024 from $1,153 in 2015. Under the new model, basic insurance coverage holders are expected to save $366 annually, with the projected basic policy cost for 2027 at $1,406, reduced to $1,040 under the new system. For those with full coverage insurance, the projected savings are $231 per year, with the projected full coverage policy cost for 2027 at $2,258, decreasing to $2,027 under the new model.
Marisa Warner, a senior press secretary to Finance Minister Nate Horner, clarified that the $259 figure represents net savings on total insurance premiums after accounting for physical damage coverages. She emphasized that the $366 figure is more accurate as it reflects the total cost savings for mandatory coverage under the care-first model, which applies to all drivers as it is required by law.
Aaron Sutherland, a vice-president with the Insurance Bureau of Canada, praised the report, stating that the new model will enhance affordability for drivers, describing it as a "win-win" situation. However, the report also noted that motorcycle premiums are expected to increase due to the higher risk of severe injury in accidents. Insurers may face one-time transition costs to adapt to the new model.
Karamveer Lalh, a lawyer at James H. Brown and Associates, raised concerns about the lack of details regarding the appeals tribunal in the report. He questioned the recoverable costs at the tribunal and highlighted the uncertainty for accident victims until more information about the new system is available. The province assured that injured Albertans could still sue at-fault drivers for pain and suffering damages if the driver was convicted of an offence under the Criminal Code or Traffic Safety Act.
Overall, the introduction of the "care-first" model in Alberta's auto insurance system is expected to bring savings for drivers and improve affordability. While there are concerns about the transition and potential limitations, the projected premium savings indicate a positive change for Albertans in the coming year.