New bill would launch Alberta's overhaul of auto insurance

Finance Minister Nate Horner introduced a bill Monday he says will transform Alberta's auto insurance regime. 

Bill 47, The Automobile Insurance and Care-First Benefits Act, will move Alberta to what Horner describes as a "care-first" system where the majority of injury claims are settled without going to court.

The province currently has a tort-based system where claims for severe injuries are litigated in court. 

Horner told reporters at a news conference Monday morning that the cost of litigation is driving up insurance rates. He says Bill 47, if passed, will drive down that amount. 

"You're basically taking 20 per cent of the cost out of the system and that's going to be given back to the system through increased benefits and access to healthcare and savings," he said. 

"We're confident that, with what we see in other jurisdictions all around us, that the savings will be there."

The setup resembles publicly delivered "no-fault" systems in Manitoba, Saskatchewan and British Columbia, but is delivered by private insurers. 

The ability to sue is reserved only for people involved in a collision where the at-fault driver was convicted of a serious driving offence. The offences that qualify as serious in the eyes of the legislation will be listed in future regulations. 

The legislation prescribes what people injured in a collision could expect to have covered by their insurer including medical and rehabilitation expenses.  

If passed, the bill also dictates that victims could also expect a permanent impairment benefit if their injuries prevent them from working or attending school. Families would receive a death benefit if a loved one died in a collision where they weren't at fault.

People found to be at fault, due to driving while impaired for example, would receive financial help to recover from their injuries but likely won't receive other benefits such as the permanent impairment benefit. Horner said this is the practice in other provinces with a no-fault system. 

Details such as when a victim could sue for damages or when an at-fault driver could be denied benefits beyond medical care will come in future regulations, too. 

An independent Alberta Automobile Care-First Tribunal would be the place where people could appeal if they are unhappy with the benefits provided by their insurance company. 

The new system is set to come into effect on Jan. 1, 2027.

Industry reaction

Aaron Sutherland, a vice-president with the Insurance Bureau of Canada, said the bill would improve auto insurance but more needs to be done to make the insurance market desirable for insurers. 

The province has capped insurance rates below cost for the last three years, forcing several companies to stop offering coverage in Alberta, he said.

"While these reforms are a good step forward, today's announcement alone will not bring insurers back to Alberta," Sutherland said.

"To do that, the province must end its rate intervention, cut red tape and let the competitive market create the conditions for lasting affordability."

Some injury lawyers are not happy with the bill. Jackie Halpern, spokesperson with the Alberta Civil Trial Lawyers Association, said her group is concerned about the bill moving Alberta closer to a no-fault insurance system. 

In a statement, Halpern said the bill will make dangerous drivers face less accountability, and leave very few options for drivers that sustain serious injuries in vehicle crashes.

"The government's new 'care-first' system removes the fundamental right of Albertans to hold at-fault drivers and insurance companies accountable through the courts," she said.

"We are particularly disappointed by the restrictions on litigation and the broad discretion given to insurance companies to make benefit decisions that will be difficult for injured Albertans to challenge — even with the creation of a new tribunal."

Reports commissioned by the province in the past suggest about 650 to 800 legal jobs will be lost under this model. 

The government has rejected a transition to a public auto insurance system like in Saskatchewan and B.C. as it would cost $3 billion to get it started.