In Edmonton, and throughout Alberta, auto insurance has always been archetypal example of risk management. It has also been a bone of contention among consumers, lawyers and insurance companies.
In Alberta, the risk management that is auto insurance, and the sticking point, is headed for a major change. The province is moving to a “Care-First” (or no-fault) system from the province’s current tort model, starting Jan. 1, 2027.
There are complex details, but the government’s announced perspective is reducing legal costs and focusing more on treatment and benefits for injured Albertans. Experts caution that the transition may not be smooth sailing. In fact, a dragged-out stand-off is already brewing.
Readying to implement the new system on January 1, 2027, the government explains Care-First as a shift away from the traditional “tort” (lawsuit-based) system.
Instead of waiting for a court to determine who was at fault before receiving full compensation for injuries, the consumer will work directly with their own insurance company to access benefits, immediately. The province underscores that the no-fault focus will be recovery, not litigation. Although the way injuries are handled will change, coverage for physical damage to the vehicle remains the same as it is now.
Of course there is much fine print, and all three sides of the story—insurers, drivers and lawyers—acknowledge pros and cons.
Insurance companies welcome no-fault, mostly because they contend it will lower premiums for drivers and reduce legal costs for insurers. The Insurance Bureau of Canada (IBC) enthusiastically points out that the care and benefits for people injured in car collisions will be significantly more efficient and timelier.
Lawyers beg to differ. There is caution and warning from Edmonton lawyers that Alberta’s new no-fault system will take away a crucial recourse option for drivers and put too much power in the hands of insurers.
With much expertise and some admitted professional insurance sector bias, Karim Mouait, president of the Insurance Broker’s Association of Alberta (IBAA) and president of Edmonton’s Cornerstone Insurance Brokers, highlights some key differences between at-fault/liability insurance and no-fault/Care First insurance.
“The current system in Alberta is primarily fault based. That means after a collision, responsibility is determined and the at fault driver’s insurer pays for damages and injury compensation. People injured in an accident can also pursue lawsuits for pain and suffering against the at fault party.
“This has created an environment of a rapid increase in claims injury and premium costs due to high litigation. Larger settlements and longer claims durations, are often as high as 20 per cent of the policy premium.
“Under the Care-First model, the focus shifts from determining fault to ensuring injured people receive medical care, rehabilitation, and income support immediately,” Mouait says. “Instead of suing another driver, individuals primarily access benefits directly through their own insurer. By expediting the process and focusing on care and recovery, cost is removed from the system.”
The IBC points out that, under no-fault, people injured in collisions will receive faster and better care to help them recover, with the most generous auto insurance benefits in the country, and that drivers may purchase extra coverage for more extensive protection.
IBC adds that, in addition to medical needs, lump-sum payments for permanent impairments will be provided with one key difference from the current tort system. The funds will go directly to those injured in collisions, rather than to lawyers in costly court battles. Insurers brag about no-fault translating to benefits within weeks vs months or years.
Edmonton lawyers do not share the optimism. In fact, they beg to differ.
“It’s not clear why the government is implementing no-fault insurance,” says plugged-in Edmonton lawyer Shad Chapman, partner with Brownlee LLP, the respected Western Canadian law firm, with offices in Edmonton, Calgary, Vancouver, and Regina. “At its root, it is a big government disruption of natural market forces and price signals. Like any big government solution, it will likely have the opposite effect of its stated intention of reducing costs.
“Private no-fault insurance is actually the most expensive way of dealing with accident claims. The no-fault/care first plan seems designed to keep bad drivers on the road at the expense of good drivers.”
He notes from experience that natural price signals would make insurance more expensive for bad drivers and less expensive for good drivers. “Suppressing market forces removes disincentives for bad driving and fails to reward good driving. That is likely to lead to bad outcomes.”
Despite the alleged upside and downsides of no-fault car insurance, it has been a long-term Alberta issue and not as sudden as some may think.
In the past three years, the province has introduced various reforms to reduce the cost of automobile insurance. Regardless, premiums have climbed steadily and Alberta premiums now average approximately $1,835 per driver—the second highest in Canada, after Ontario.
A recent report released by MNP showed that in the current at-fault Alberta system, legal costs for litigated claims vastly exceed, sometimes more than double, the amount provided in a cash payment for pain and suffering for those injured in collisions. The MNP report detailed that approximately 38 per cent of a settlement disappears in legal costs charged by the claimant’s lawyers, while on average, just 15 per cent goes to the claimant for pain and suffering.
“The situation for the affordability and accessibility of auto insurance became a crisis point in 2024, for a myriad of reasons,” Edmonton’s Karim Mouait says. “Post pandemic, the price of vehicles and repair costs grew by 40 per cent. For example, a fully loaded pick-up truck is now worth north of $100,000. Ten years ago, you could buy a gently used Lamborghini for that price.”
He adds that, coupled with rising accidents, insurance rate capping and high litigation costs, insurance carriers started exiting the Alberta market. It made placing insurance coverage for some drivers difficult. “In order to address the affordability and accessibility concerns the government mandated reform.
“We were headed into an environment where insurance carriers were further going to leave the province, leaving Albertans with an all-time high supply demand of Alberta’s booming population of drivers with restricted supply. More insurance carriers were leaving, resulting in Albertans driving without coverage.”
From the legal perspective, Brownlee LLP’s Shad Chapman is adamant that the no-fault downsides will outweigh the upsides. “Consumers will pay the same premiums but get less protection if they are the victim of a negligent driver. Perversely, there is more protection provided for negligent drivers.”
The IBAA’s Mouait emphasizes that, for consumers and insurance companies, Alberta’s no-fault system will be a positive. For insurance companies there will be more predictable system costs with the removal of the majority of the tort. For consumers, it will mean long-term premium stability, faster access to medical treatment, predictable benefits and, in some cases, savings.”
He admits that, after so many years of Alberta at-fault car insurance, it may be a challenge for insurance carriers to adopt a new system and also for consumers, it may be a challenge to understand and work with the no-fault claims process.”