Alberta drivers will see changes to how their auto insurance rates increase starting next year, as the province rolls out a new adjustable rate cap alongside its planned “care-first” no-fault insurance system.
A report was commissioned by the Automobile Insurance Rate Board and carried out by management consultant Oliver Wyman.
The firm was previously retained by the Alberta government to conduct a feasibility study on long-term automobile insurance reform options and a care-first system was one of the options reviewed in 2024.
The province said the most recent report, “Care-First: Actuarial Costing” finalized this March, pointed out private passenger vehicle insurance premiums have consistently creeped up, rising approximately 57 per cent over 10 years from $1,153 in early 2015 to $1,817 in late 2024.
The report said projected premiums under Alberta’s current court-based system could rise by an average of $1,000 per policy next year if the new system was not introduced.
Under the new framework, insurers will be limited to raising average rates by no more than five per cent and individual drivers renewing their policies will face a maximum premium increase of 10 per cent.
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“The 10 per cent cap is a maximum limit on renewal increases, not a standard increase every driver will face,” said a statement from Finance Ministry press secretary Marisa Warner.
The province said premiums will be determined by individual risk factors rather than market pressures.
“Most drivers will not see their premiums increase 10 per cent — not by a long-shot.
“Under Care-First, premiums will still be based on individual risk, which means drivers with clean records will generally pay less, while drivers with at-fault collisions or serious convictions will pay more.”
The provincial government says the changes could mean savings of up to $366 on basic insurance when drivers renew their policies.
However, Warner said bad drivers, such as ones with new Criminal Code convictions, will not have the cap applied to them. Oliver Wyman’s report also estimated a significant increase in motorcycle average premiums due to a higher likelihood of severe injury from a collision.
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Auto insurance changes coming to Alberta
The overhaul is drawing concern from some in the legal community, who warn the new system may not adequately protect people with injury claims.
Karamveer Lalh, board secretary with the Alberta Civil Trial Lawyers Association, said it remains unclear whether injured Albertans will receive sufficient protections.
“We’re not particularly optimistic at this point in time that we’re going to see the types of protections that injured Albertans do require,” Lalh said. “But of course we can’t say for sure until it’s been completely finalized.”
The province said the new model is not technically “no-fault” as Albertans will continue to be able to sue an at-fault driver in select circumstances.
The adjusted rate cap introduces two limits:
- Five per cent cap on insurers, so insurers cannot increase rates by more than 5 per cent per year across their overall book of business (their total customer base).
- Ten per cent cap on individuals, where each premium cannot increase by more than 10 per cent at renewal.
The province said the two caps work together: the five per cent cap controls overall increases on the system, while the 10 per cent cap protects individual drivers from large spikes.
The updated approach replaces the previous Good Driver Rate Cap and extends savings to more Albertans, the province said, adding it will monitor the new system closely and make adjustments if the expected savings do not materialize.
The Finance Ministry’s statement said if any part of the new model fails to deliver the intended savings, the province “will not hesitate to strengthen protections and tighten policy.”
The changes will come into effect on Jan. 1, 2027.
Auto insurance varies across Canada. It’s managed by provincial government corporations in B.C. Saskatchewan, and Manitoba while insurance is run by private companies in all other provinces except Quebec, which uses a split model in which the government covers bodily injuries, while property damage and third-party liability are handled by private insurers.
So our insurance is guaranteed to go up at least 5%. If we get attacked by the roadside tax collectors, it will go up 10%. And this is going to save us money? HOW?
The new system will limit payouts. So combine the 2 and insurance companies will rake in the money.