Edmonton, Alberta — Alberta’s government has announced its plan for an updated insurance system, saying it will raise its auto insurance rate cap for good drivers to a combined 7.5 percent starting in January 2025, with a switch to a no-fault system set for 2027.
Specifically, starting in 2027, the province plans to introduce a hybrid form of the no-fault model that prevents collision victims from suing drivers and their insurers.
The government is calling this adjustment a “care-first system” which will still allow catastrophically injured victims of a collision the right to sue. Injured drivers may also sue an at-fault driver who committed a criminal offence.
Starting in January 2025, insurers filing for rate increases with the Automobile Insurance Rate Board will be capped at five percent. The board will also allow for an additional 2.5 percent rate increase so insurers can also file for natural disaster-related costs. As a result, good drivers, as specified under the province’s system, will see their rates capped at a combined 7.5 percent each year.
Canadian Underwriter further highlighted that the province’s Finance Minister Nate Horner said at a news conference last Thursday that “this wasn’t something we wanted to do. We’re trying to protect as many Albertans as we can. We’re trying to show the (insurance) companies a path to 2027 that will somewhat stem the bleeding. It certainly won’t make them whole, but we hope that we can show them a light at the end of the tunnel, and they consider staying in Alberta until 2027 to deliver this new product.”
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