A new actuarial report commissioned by the Automobile Insurance Rate Board (AIRB) indicates that Albertans may finally realize the promised savings from the province's upcoming "care-first" auto insurance model. The analysis projects an average realized premium savings of $259 per policyholder under the new system.
Substantial Savings Projected for Basic Coverage
The report, conducted by Oliver Wyman, provides detailed projections for insurance costs under the new model scheduled to begin on January 1, 2027. For drivers with basic insurance coverage, the projected annual savings are even more substantial at $366. The average basic policy, which was projected to cost $1,406 in 2027 under the current system, would drop to $1,040 under the care-first approach.
Full Coverage Policyholders Also Benefit
Those with comprehensive full coverage insurance would see projected savings of $231 annually. The report indicates the average full coverage policy would decrease from a projected $2,258 in 2027 to $2,027 under the new model.
Marisa Warner, senior press secretary to Finance Minister Nate Horner, clarified the different savings figures. "The $259 figure reflects the overall net savings on the total insurance premium, after accounting for physical damage coverages," Warner explained. "The $366 figure is more accurate since it reflects the total cost savings provided by the change from the current system to the new model."
Context of Rising Insurance Costs
The report comes against a backdrop of significant premium increases over the past decade. According to the analysis, the average Albertan's insurance premium has increased by 57 percent over ten years, rising from $1,153 in 2015 to $1,817 in 2024.
"All Alberta drivers are required to carry basic (mandatory) coverage, but not everyone chooses to purchase optional coverages such as comprehensive," Warner noted. "The $366 figure reflects estimated average savings on mandatory coverage under the care-first model. This is the figure that would apply to everyone, as purchasing this level of coverage as a minimum is the law."
Industry Response and Implementation Details
Aaron Sutherland, vice-president with the Insurance Bureau of Canada, welcomed the report's findings. "At a time when virtually everything else in our life is increasing in cost, auto insurance will finally be one of those items that is coming down in the coming year," Sutherland said. He called the projected savings a "win-win" for drivers and described the report as an indication that the new model will improve affordability.
The province introduced legislation last spring to make Alberta the first province in Canada to adopt a privately delivered "care-first" auto insurance system. The new model will also limit Albertans' ability to pursue legal action except in select cases, a change intended to reduce litigation costs within the insurance system.
Motorcycle Premiums Expected to Increase
While most drivers are projected to see savings, the report indicates one exception: motorcycle premiums are expected to increase under the new system. The report attributes this primarily to the higher likelihood of severe injury when motorcycle accidents occur, which would increase care costs under the care-first model.
The report represents the most comprehensive analysis to date of how Alberta's auto insurance landscape will change under the new system, providing concrete numbers to support the government's claims of improved affordability through insurance reform.
