Alberta insurers have approved an average 13.7% reduction in auto insurance premiums starting January 1, 2027, when the Care-First system takes effect, saving drivers approximately $297 per vehicle by expanding medical and rehabilitation benefits while limiting lawsuits.
- Average premium reduction of 13.7% or $297 per vehicle when Care-First launches on January 1, 2027
- Approximately 88.2% of insured private-passenger vehicles in Alberta will see premium decreases
- Care-First expands medical, rehabilitation, and income-replacement benefits while limiting lawsuits to specific circumstances
- The reform addresses bodily injury and legal claims, which account for about 60% of personal auto loss costs
- Covers approximately 3.1 million vehicles under approved rate filings
Alberta insurers have projected an average 13.7% reduction in private-passenger auto premiums when the province’s Care-First system takes effect on Jan. 1, 2027.
The approved rate filings cover approximately 3.1 million vehicles. The average reduction is $297 per vehicle, according to the Automobile Insurance Rate Board.
About 88.2% of insured private-passenger vehicles are expected to receive a reduction. Premiums are expected to increase for 9.8%, while 2% are expected to remain unchanged.
The results closely match an estimate provided by Definity president and CEO Rowan Saunders. He told the CIBC Eastern Institutional Investor Conference on Sept. 24 that lower injury and legal costs could produce a one-time industry-wide premium adjustment of approximately 14% to 15%.
Definity Financial is a Waterloo, Ont.-based property and casualty insurance group. Its businesses include Economical Insurance and Sonnet Insurance.
Under Alberta’s current system, people injured in collisions can sue at-fault drivers for damages beyond the benefits available through their own policies. Care-First will provide expanded medical, rehabilitation and income-replacement benefits through insurers while limiting lawsuits to specific circumstances.
“About 60% of the loss costs in personal auto happen to come from bodily injury, legal claims, etc.,” Saunders said.
The reform does not change the process for estimating or repairing damaged vehicles. Insurers were not permitted to change collision or comprehensive coverage prices as part of their Care-First implementation filings.
Individual premiums will not all fall by 13.7%. The result will depend on the insurer, vehicle, selected coverage, driving record and other risk factors.
About 12% of Definity’s auto insurance portfolio is in Alberta, representing approximately $300 million in premiums. Saunders said the reform should move Alberta’s currently unprofitable insurance market closer to break-even.
He cautioned that the change would not eliminate pressure for future rate increases.
Ontario accounts for approximately 70% of Definity’s auto insurance portfolio. Saunders said claims costs in that province have stabilized following several years of inflation, vehicle theft and substantial rate increases. He expects Ontario rate increases to be smaller in the coming years.
