Alberta to Overhaul Auto Insurance System Amid Rising Premiums
The Alberta government planning to revamp its auto insurance system with a series of changes this spring aimed at addressing rising costs. However, costs are not expected to come down until 2027 when the changes are fully implemented. Until then, good drivers could see their premiums jump higher than they’re used to.
Starting January 1, the cap on premium increases for good drivers will rise from 3.7 per cent to 7.5 per cent. The province says lifting the limit on premium increases is necessary to combat skyrocketing costs for repairs, increased injury litigation, and claims linked to natural disasters like hail and floods.
The Alberta NDP say the increase will hurt Albertans in the short term, and future savings are uncertain.
“Currently, rate increases for good drivers are capped at 3.7 per cent,” said Court Ellingson, NDP Shadow Minister for Finance. “The UCP wants to raise this to 7.5 per cent, effectively doubling the allowable rate increase.”
For years, Alberta’s auto insurance rates have ranked among the highest in Canada. The province blames the costly insurance on rising injury litigation among other factors.
Legislation set to be introduced in spring 2025 will transition Alberta to a partial no-fault insurance model, similar to Saskatchewan’s. Under the proposed system, accident victims will no longer be able to sue for pain and suffering in most cases. Exceptions will include injuries caused by criminal acts such as impaired or dangerous driving.
Nate Horner, Minister of Finance says the changes will be a net benefit to Albertans by offering them faster care and compensation when they are injured in a motor vehicle accident.
“High auto insurance rates put a strain on Albertans,” said Horner. “By shifting to a system that offers improved benefits and support, we are providing better and faster care to Albertans, with lower costs.”
“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.
While the government says these changes could save drivers up to $400 per year, the benefits won’t likely be realized until January 2027 when the auto insurance overhaul is complete.
