The Alberta government has introduced legislation to overhaul the province's auto insurance system, replacing the current litigation-based model with a care-focused approach to reduce costs and speed up access to benefits.
If passed, Bill 47, the Automobile Insurance Act, would apply to collisions on or after Jan. 1, 2027. The proposed changes would establish a privately delivered system that covers medical treatment, rehabilitation, income replacement and permanent impairment—regardless of who caused the crash.
The right to sue would be sharply restricted. Legal action would be limited to cases involving serious driving offences or when injury-related costs exceed insurance coverage limits.
"This legislation is about getting people the help they need—quickly and without unnecessary litigation," Finance Minister Nate Horner said Monday. He said the government expects the new model to lower insurance costs and stabilize premiums.
Horner pointed to a 48 per cent rise in collision-related lawsuits between 2018 and 2022, with annual litigation costs now exceeding $1.2 billion. Under the proposed system, Albertans injured in crashes would no longer need to sue to access compensation.
Medical and rehabilitation coverage—currently capped at $50,000 over two years—would become unlimited for eligible expenses over a person's lifetime. Weekly income replacement would increase to 90 per cent of net income, capped at a gross annual income of $120,000 and payable to age 65.
A one-time permanent impairment benefit of up to $295,000 for the most serious injuries would be available. Other supports would include daily living assistance, home care, medical equipment and income replacement for caregivers, students and minors.
Drivers could be denied benefits if they intentionally cause a crash, are convicted of serious offences, or provide false or misleading information to their insurer. Horner said most injured Albertans would remain eligible for care, but noted that certain benefits, such as permanent impairment payments, may not apply in "egregious" cases.
The bill would also establish the Alberta Automobile Care-First Tribunal to resolve disputes between insurers and claimants. Insurers would be required to assist with claims, issue written decisions, and continue payments during the review process. Details on the tribunal's timelines and procedures have not yet been finalized.
The Insurance Bureau of Canada (IBC), which represents private insurers, welcomed the legislation and said the new system's success depends on how much litigation is allowed to remain.
"Care-based auto insurance systems work by replacing costly legal battles with more efficient access to benefits and improved premiums," said Aaron Sutherland, IBC vice-president for the Pacific and Western regions. "The more lawyers are involved in Alberta's Care-First system, the less likely that drivers will save."
Sutherland said that while the reforms are a positive step, Alberta's recent cap on insurance rates has discouraged insurers from operating in the province. "For three years, the government has suppressed auto insurance rates below the cost of providing coverage," he said.
Dr. Jacqueline Boyd, chair of the Chiropractic Association of Alberta, said the proposed changes could help patients access treatment more quickly. "Ensuring that care comes first without unnecessary delays or legal obstacles is a meaningful and much-needed shift in our system," she said.
Boyd said chiropractors are well positioned to provide evidence-based treatment for musculoskeletal injuries, such as back pain and whiplash—among the most common injuries sustained in collisions.
Horner rejected suggestions that the legislation amounts to a no-fault model. "No-fault is kind of a misleading term," he said. "This is a fault—but care-based—system. Fault still matters."
Asked why the province did not pursue a public insurer similar to Saskatchewan's, Horner said doing so would cost at least $3 billion and take five years to implement. "We believe in competition, we believe in private market," he said. "But we think this is the first step."
The government will monitor how rates respond to the changes. If prices do not come down, Horner said Alberta would explore other options. "They're under a lot of pressure right now... but there are many public insurers across the country if this doesn't work," he said.
The bill gives the Superintendent of Insurance authority to set forms, fees and administrative rules. Final regulations are expected in fall 2025, following consultations with industry and healthcare stakeholders.
The province says the reforms are based on two independent reviews and public input. Alberta commissioned studies from consulting firms Oliver Wyman and the Nous Group, and received feedback from more than 16,000 residents.
According to the government, Alberta has the second-highest auto insurance premiums in Canada, after Ontario. The Oliver Wyman report estimated the proposed model could cut average policy costs by $375 to $385, primarily by reducing legal and court fees.
"You're basically taking 20 per cent of the cost out of the system," Horner said.
As an interim measure, the province will cap insurance rate increases in 2025 for "good drivers" at five per cent, with an additional 2.5 per cent permitted to cover disaster-related claims. Drivers with recent at-fault collisions or serious traffic offences would not qualify.
Bill 47 was introduced March 24 by the Ministry of Treasury Board and Finance. If passed, it will take effect by proclamation.
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