Report finds including limited right to sue in new Alberta auto insurance model could cost drivers up to $136 annually

Province's Care-First system unlikely to deliver premium savings for drivers unless changes are made

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 ibc.ca. 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.

SOURCE Insurance Bureau of Canada