One year after the Alberta government announced its comprehensive plan to transform the province's auto insurance system, substantial advancements have been made toward establishing the new Care-First model. The reforms are scheduled to take effect in January 2027 and are projected to deliver reduced average premiums for most Alberta drivers.
Progress and Promises of Care-First Model
This development represents a significant victory for Albertans, who currently pay some of the highest auto insurance rates in Canada. After years of adjustments failed to control escalating costs, the provincial government appears to be moving in the right direction with a system designed to provide better care for accident victims at more affordable prices for drivers.
The new insurance framework will ensure that individuals injured in collisions receive faster and more comprehensive medical care to support their recovery, offering the most generous benefits available nationwide. Drivers can also purchase additional coverage for enhanced protection, providing greater peace of mind.
Challenges to Implementation
Despite encouraging prospects for success, several obstacles remain as the government works toward full implementation. The reforms face strong opposition from Alberta's trial lawyers, who benefit financially from the current litigation-based system. Additionally, critical efforts to restore competition to the insurance market present ongoing challenges.
Under the new approach, lump-sum payments for permanent injuries will continue, but with one crucial difference: all funds will go directly to collision victims rather than being diverted to lawyers through expensive court battles.
The Cost of Litigation in Current System
A recent MNP report reveals troubling inefficiencies in the existing insurance framework. The study found that legal costs for litigated claims substantially exceed - more than doubling - the amount provided in cash payments for pain and suffering to those injured in collisions.
Approximately 38 percent of settlements disappear into legal fees charged by claimants' lawyers, while on average, only 15 percent actually reaches the claimant for pain and suffering compensation. Compounding this inequity, injured drivers often wait years before receiving any settlement funds.
The government has explicitly stated that the new auto insurance system will "put care first so Albertans get better, faster and more reliable auto insurance", describing it as care without delays, compensation without conflict, and dignity when it matters most.
