Alberta is driving away fairness with no-fault insurance

Winter is closing in and Alberta’s roads are about to turn into the province’s largest skating rink. Thanks to the government’s no-fault insurance overhaul, if you slide into someone’s bumper this season, you might not need a lawyer. However, that might not be a good thing.

Alberta’s recent overhaul of its auto insurance system marks a seismic shift in the relationship between consumers and the insurance industry. Auto insurance in Alberta is the second most expensive in Canada. The provincial government is promising a more efficient system by changing the rate cap for good drivers and implementing a no-fault model. Supposedly, it will bring lower premiums and faster claims processing over time. Yet, these reforms may come at a steep price. One that undermines the principles of fairness and accountability which Albertans have long advocated for.

The no-fault insurance model, central to this reform, eliminates the right of accident victims to sue for damages except in extreme cases. Instead, claims are handled directly by insurers, regardless of fault. Proponents argue that this streamlines the process, avoiding costly legal battles and reducing administrative overhead. In theory, this translates to savings for consumers. However, no-fault insurance risks shielding negligent drivers and insurers from accountability, leaving accident victims with limited recourse for fair compensation.

For many Albertans, the ability to pursue legal action after an accident has served as both a safeguard and a deterrent. Without this mechanism, victims may be left with inadequate compensation determined by the same companies tasked with minimizing payouts. The removal of this check-and-balance raises concerns about whether the new system prioritizes insurance industry profits over the well-being of consumers.

Equally troubling is the decision to raise to cap on insurance rates to 7.5 per cent for good drivers. Before the reform, Alberta’s rate cap provided a degree of financial predictability for drivers, particularly those in lower-income brackets. Changing this limit, while ostensibly meant to stabilize the insurance market, risks making premiums unaffordable for many. Especially for vulnerable groups such as young drivers and those with limited financial means. For a province already grappling with inflation and economic uncertainty, the timing of this policy shift feels particularly precarious.

The combined impact of these changes could be significant. Vulnerable drivers may find themselves priced out of essential coverage. They may end up paying more for insurance without the legal means to advocate for themselves. At the same time, the legal sector, which has traditionally played a role in holding insurers accountable, also faces diminishing opportunities to advocate for accident victims. This risks creating an environment where fairness takes a backseat to expediency.

Alberta’s reforms also carry national implications. As provinces across Canada grapple with rising insurance costs, the success — or failure — of Alberta’s model could influence similar changes elsewhere. If the no-fault system proves effective, it might become a blueprint for other jurisdictions. However, if it disproportionately benefits insurers while leaving consumers worse off, Alberta’s experiment could serve as a cautionary tale.

Ultimately, the debate over no-fault insurance and rate caps isn’t just about economics. It’s about the values that underpin Alberta’s social contract. A fair auto insurance system should balance affordability, efficiency, and accountability. While reform is necessary, the current trajectory raises serious questions about whether these changes align with those principles.

Albertans deserve an insurance system that works for them — not one that erodes their rights or prioritizes corporate interests. Policymakers must carefully reconsider the implications of these reforms before they become entrenched. Otherwise, the price of change may prove far higher than anyone anticipated, leaving fairness as the ultimate casualty.