New changes coming to auto insurance in Alberta
Alberta drivers will see a new cap on auto insurance rate increases when the province’s new “Care-First” insurance model takes effect next year, the province announced on Wednesday.
Under the updated system, insurers will not be allowed to increase rates by more than five per cent annually across their overall customer base, while individual premiums for average drivers will be capped at a 10 percent increase at renewal.
The province says the adjusted rate cap will replace the current Good Driver Rate Cap, which the province says excluded some drivers from price protection after things like minor infractions, moving communities, or switching insurers.
“Our priority is ensuring the care-first system provides notable savings,” said Nate Horner, president of the treasury board and minister of finance.
A report commissioned by the province from consulting firm Oliver Wyman estimates drivers with basic coverage could save an average of $366 per vehicle annually once the new system is in place.
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The province says the Care-First model is designed to reduce legal and administrative costs tied to lawsuits by focusing instead on faster access to medical care and recovery after collisions.
Under the system, Albertans will still be able to sue at-fault drivers convicted of offences under the Criminal Code, including impaired driving, as well as certain offences under the Traffic Safety Act. Drivers will also have the ability to sue if out-of-pocket expenses exceed the coverage limits in their insurance policy.
Premiums will continue to be based on individual risk factors, meaning drivers with collisions or convictions could still see higher rates.
The province says the Automobile Insurance Rate Board will continue monitoring insurer profitability and rating programs as the transition to the new system rolls out.
Care-First auto insurance and the adjusted rate cap are set to take effect Jan. 1, 2027.