Albertans are looking for relief on their auto insurance bills, but insurers caution that affordability gains will be hard to deliver under the province’s current reform path.
A new Yorkville Strategies survey found that 52% of Albertans expect the upcoming Care-First auto insurance model to lower premiums, rising to 63% among United Conservative Party supporters. However, the Insurance Bureau of Canada (IBC) warned that savings are at risk unless the province lifts its rate cap and eliminates litigation from the system.
“[I]mproving affordability will require eliminating litigation in the new model, fully adopting best practices from other provinces, and promoting a competitive insurance market,” said Aaron Sutherland, IBC’s vice-president, Pacific and Western.
The Care-First model, first announced in November 2024, was initially positioned as similar to Manitoba’s no-fault system. But Alberta’s version is set to retain the right to sue and offer more generous recovery benefits than any other province. These features, insurers argue, could increase costs rather than reduce them.
A recent MNP analysis estimated that keeping litigation could add up to $136 per driver annually. That cost pressure comes on top of inflation, rising vehicle repair costs and more frequent severe weather claims. Last year’s Calgary hailstorm alone resulted in $1 billion in auto claims.
Despite a freeze and cap on rates, 63% of Albertans surveyed said their premiums have still gone up over the past three years. The Alberta Auto Insurance Rate Board reported that insurers lost 20 cents for every dollar of premium sold in 2024, with capped rates unable to keep pace with the true cost of claims.
As a result, several insurers have exited Alberta’s market, while others restrict new business to remain viable. Brokers say the result is shrinking availability of coverage and growing challenges for drivers trying to secure policies.
Sutherland noted that without reform, the pressure on premiums and market stability will continue.
“Auto insurance premiums are facing a litany of cost pressures. As these pressures grow, the rate cap is causing turmoil in the auto insurance market, negatively impacting drivers and their ability to secure the coverage they need," Sutherland said.
