The Alberta government’s advisory panel is recommending the province adopts a no-fault insurance model to make car insurance affordable and sustainable in the province.
Albertans have been waiting for months to learn what the Automobile Insurance Advisory Committee’s research would show. The panel’s analysis included an online survey of drivers last March.
If adopted, the move to no-fault insurance would address the rising costs of car insurance rates, medical benefits, and reducing the time it takes to compensate people hurt in collisions, according to the committee’s recommendations. Alberta currently has a hybrid tort/no-fault model whereby the insurance company of the driver found to be at-fault for a collision pays for damages.
The Alberta government has put forth what it calls the “Insurance (Enhancing Drive Affordability and Care) Amendment Act” (aka Bill 41), which contains proposed changes to how auto insurance is managed in the province. Currently, Albertans pay the third-highest auto premiums in Canada after drivers in British Columbia and Ontario.
Alberta’s Minister of Finance and President of the Treasury Board, Travis Toews, says the government will adopt a direct compensation model for vehicle repairs and replacements that stem from a collision. “This model effectively means that whether you’re at fault or not in a collision, you’ll deal with your own insurance company,” he said.
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Of note, the advisory committee’s 536-page report states, “the optimal and only solution to produce long-term stability to auto insurance pricing is replacement of the existing hybrid tort/no-fault model with a pure no-fault traffic accident care and compensation model.”
The report adds the average driver would realize a 9.4% reduction in premiums if Alberta adopts a no-fault model.
However, before the Alberta government commits to the recommendations, it will solicit the opinions of drivers, health professionals, and insurers first. That means another panel will be formed to get feedback on the no-fault proposal by mid-2021.
The advisory committee’s report follows a white paper on the subject from the Insurance Brokers Association of Alberta (IBAA) earlier this year. In it, the IBAA recommends Alberta adopts a no-fault system as well as other measures.
Meanwhile, the Insurance Bureau of Canada’s (IBC) vice-president, Western division, Celyeste Power, told Thompson’s World Insurance News IBC does not think Alberta should embrace a pure no-fault insurance system. She said the recommendations should also include the right for drivers to opt-in or out of some coverages based on their budgets and individual needs for care and benefits.
What can Alberta drivers do to contain insurance costs?
Several factors are influencing the cost of auto insurance in Alberta. These range from the cost of repairing vehicle damages to fighting insurance fraud.
Those challenges persist, as evidenced in the approved rate changes some Alberta insurers received in the third quarter of 2020.
For now, Albertans can take the following steps to help lower their premiums:
- Increase your policy’s deductibles if you can afford to do so
- Talk to your broker or agent about any available discounts you may be eligible for
- Bundle or purchase auto and home insurance with one provider
- Sign up for a usage-based or pay-how-you-drive telematics program
Other measures to help you avoid a collision include getting winter tires installed on your vehicle from November to April, driving defensively and avoid racking up traffic infractions. It’s also helpful to shop around for the lowest auto rate you can find whether your policy is up for renewal or not.