Right to sue could lower projected savings under Alberta’s auto reforms

Preserving a limited right to sue at-fault drivers under Alberta’s proposed ‘Care First’ auto reform means the province’s drivers might wind up paying an average of $136 more annually for car insurance, Canada’s insurers say.

Insurance Bureau of Canada commissioned MNP to do a cost impact study of including a limited right to sue at-fault drivers under the province’s proposed new no-fault auto insurance model. IBC released the results of MNP’s report this week.

Alberta has announced it’s moving to the Care First model as of Jan. 1, 2027. 

“Litigation in Alberta’s auto insurance system creates significant costs for Alberta drivers,” says Aaron Sutherland, vice president of the Pacific and Western regions of IBC, commenting on MNP’s findings. “Removing this, to improve affordability and care, is the main reason the government decided to transition to its Care-First model.

“The provincial government designs and mandates the auto insurance products that insurers must sell. No other province with a care-based system permits the ability to sue as envisioned in Alberta because of the significant costs it adds for drivers, while doing nothing to improve care for those injured in collisions.”

Care-First is a no-fault system, under which all Albertans injured in a collision will receive unlimited coverage for eligible medical and rehabilitation expenses and income replacement limits will be increased. The ability to sue for damages will be limited to cases in which:

• An at-fault driver is convicted of a Criminal Code offence.
• An at-fault driver is convicted of select major Traffic Safety Act offences.
• Out-of-pocket expenses exceed policy limits.

Alberta says the new system will lower average annual auto insurance premiums to $815. As of August 2024, BrokerLink reported Alberta drivers could expect to pay an average of $1,578 per year for car insurance.

Extrapolating from MNP’s report, the Alberta government is assuming an average annual car insurance premium of $1,204. It’s projecting its Care First model will result in average annual premium savings of just under $400.

However, MNP notes, this assumption is based on a purely no-fault model that does not include a right to sue at-fault drivers for breaking the law.

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“The Alberta government projects potential savings of up to $389 per driver,” says MNP’s April 2025 report, Impacts of Tort Access on Driver Premiums in the Care-First Model. “These estimates are based on a study by Oliver Wyman…examining a transition to a privately delivered model similar to that used by Manitoba Public Insurance (MPI)….

“Manitoba’s auto insurance system does not provide the ability to sue at-fault drivers following collisions, except for property damage. Permitting tort, as envisioned in Alberta’s Care-First model, will have a negative impact on potential premium savings. “An expansion of tort access could reduce the premium savings for drivers.”

By how much?

It depends how many tort claims would be made under the limited tort provision. MNP notes there are no reliable stats for how many people sue at-fault drivers who commit Criminal Code or Traffic Safety Act offences. It also notes the potential impact on savings would depend on whether the ability to sue would apply to the full range of Criminal Code offences, or a more limited subset of them.

For the purpose of its analysis, MNP assumed between 2,685 to 3,585 tort claims annually against drivers who commit offences. It also assumes the ability to sue would be restricted to a limited number of Criminal Code and Traffic Safety Act offences.

Under these scenarios, MNP reports, Alberta drivers would not be paying $815 for car insurance per year, but rather $947 — an increase of $132 based on access to tort under the Care First model.

IBC is calling for the Alberta government to “course correct” on its proposed model by eliminating access to tort altogether.

“Several Alberta insurers have done their own cost estimates [that] suggest the premium impact to drivers may be much higher than MNP has estimated,” says an IBC website that hosts the MNP report.

“As the government moves toward its Care-First model, IBC has made it clear that court access in the new system will jeopardize both the premium savings promised to Alberta drivers and the long-term viability of the new Care-First model itself.”