Alberta auto insurance reforms coming to stabilize the system, lower rates long term: finance minister

A major shakeup is coming to auto insurance in Alberta, the province’s finance minister confirmed to reporters Tuesday afternoon, while remaining tight-lipped on the details.

It came about 24 hours after the CBC published a story citing sources that say a 3.7 per cent rate cap on premiums will be lifted and a no-fault system will be brought in.

“We will be having an announcement before the end of the week on auto insurance,” Nate Horner said.

“I’m afraid I’ll have to leave the details until then, but it’ll be the culmination of the consultation and studies that we’ve done.”

So why make changes? Well, Alberta has by far the priciest premiums for car insurance in the country and still some companies are leaving the province, saying they can’t make money under a rate cap. 

Insurance companies claim rates need to increase to pay for more costly car repair and personal injury claims. 

“The system is in peril right now. Changes will have to be made. (In order to) provide Albertans with great insurance at an affordable price, at least comparatively,” Horner said.

The UCP has been promising reforms for months, including at the party’s annual general meeting in Red Deer in early November.

Government officials have been openly talking about a no-fault system, which ends or limits an injured persons right to sue. Instead, injured people are compensated by their own insurance. 

But a spring report for the government found a public system, similar to what BC, Saskatchewan, and Manitoba have, would slash rates for drivers by about $700 a year for full coverage.

“It’s really time for us to do what the right-wing province on one side and the left-wing province on the other side do, which is to look at a public insurance option,” Alberta NDP Leader Naheed Nenshi told reporters at the legislature on Tuesday.

“This government is so ideologically blinkered that they can’t look at the right answers.”

On the streets of Edmonton, CityNews spoke to some who have a desire for auto insurance change but were also skeptical that the government is on the right path. 

“If they can prove it’ll save money in the long term, sure, but if they can’t, I don’t see the point of it,” Nic Jefferis said of the changes.

“I think they should definitely move to public insurance, cause in Manitoba where I’m (originally) from, it’s public insurance and it’s much cheaper,” Jesse McPherson told CityNews.

“Prices going up in the short term is not a particularly great idea just based on the state of the economy and the extremely low minimum wage,” Luna Aringo said.

The government plans to hold a press conference on Thursday to formally announce the changes.

When the rate cap is lifted, prices are expected to go up, but Horner said the ultimate goal is to make insurance more affordable.