Western Standard - Alberta's automobile insurance regulator weighs in on care first system

00:00:00.000 Hi, my name is Leah Muschid. I'm a reporter here at the Western Standard and today we're going to

00:00:04.780 give both sides their due by once again discussing Alberta's incoming 2027 Care First Automobile

00:00:10.820 Insurance Model. To do just this, the Western Standard has invited Heather Mack, Manager of

00:00:16.980 Education and Engagement, to Alberta's Automobile Insurance Rate Board, which is responsible for

00:00:22.420 regulating insurance in the province. So thank you again for coming here today, Heather, and being

00:00:28.320 with us. And my first question for you is that you've stated that your position is that Alberta

00:00:35.260 and auto insurance industry is in fact not thriving. So could you tell us why this is?

00:00:41.340 Well, the best example would be to look at our excess profits report that we did this year. This

00:00:47.000 is a new authority that we have at the board, which is to make sure that insurers aren't making excess

00:00:52.280 profit. And the report found that insurers on average lost about 20% from Alberta auto insurance.

00:01:00.460 So that means for every dollar that they're taking in on premium, they're actually spending 97 cents on

00:01:07.760 claims and then another roughly 27 cents on administration. So we're finding that insurers

00:01:14.180 are absolutely not making profit on the product right now. And we're starting to see other movements

00:01:19.800 in the market that tell us it's just not healthy right now.

00:01:23.680 Okay, yeah, that makes sense. I also kind of wanted to discuss a little bit about the

00:01:28.480 insurers that like left, which was, I wrote down here, Sonnet, S&Y, and Zenith. And apparently

00:01:36.600 they have parent companies that still operate in Alberta. So could you tell me how that works? And

00:01:41.020 why, in your perspective, this is like, still like not a good sign?

00:01:45.180 We haven't had a lot of insurers leaving the market. So even when the small ones do,

00:01:50.260 that's a signal to us that something's going on. But really smaller insurers are unable to absorb the

00:01:56.220 losses that the large carriers can. They have bigger markets, they may operate in more jurisdictions,

00:02:01.880 and they can just handle the bumps that come in the insurance market. So seeing three, even though

00:02:08.640 they are smaller players leave the market is still to us a poor sign.

00:02:14.720 Okay, yeah. So also, I'm a bit confused about it as well. So this wouldn't be the just them like

00:02:20.180 retiring the company name and introducing a new one. This is just them not being able to handle it.

00:02:25.720 Like, is that how it works?

00:02:27.060 Yeah, generally, they have to signal to the superintendent of insurance if they're withdrawing

00:02:31.600 from the Alberta market. It's a business decision. So ultimately, there may be other reasons behind

00:02:37.100 it. Like, maybe some insurers are amalgamating some of their smaller companies. But overall, again,

00:02:45.180 this is a loss to those customers in Alberta that were purchasing. So for example, Sonnet was one of

00:02:52.200 the very few companies that was like a purely online company, and a lot of Albertans like that.

00:02:57.840 And that's no longer available. There aren't that I can think of any insurers where you can fully

00:03:03.920 transact online in Alberta anymore.

00:03:06.840 Okay, yeah, that makes sense. Okay, well, then my next question would be about premiums. So you said

00:03:12.980 that the cause for the premiums, like driving up premium costs were lawsuits. So could you also explain

00:03:21.420 to me, like why that is the case?

00:03:24.380 So since about 2020, and there were some previous policy changes by government, but let's go from

00:03:32.100 since 2020, we're seeing increased severity, which means the size of the bodily injury claims in

00:03:38.900 Alberta. Frequency has been pretty stable, like we're seeing the same number of claims. But they've gone

00:03:45.480 from in 2020, the average bodily injury claim was about $90,000. Today, it is 178,000. And even in the

00:03:55.140 last six months, it's gone from 109,000 to 178,000. So those claims are what is directly translating

00:04:04.200 into higher premiums that we all pay.

00:04:07.400 Okay, then also, would you be able to say like, why? Why is that happening?

00:04:15.100 There are more lawsuits in Alberta, for whatever reason, it's a rich product, we see, you know, that it's just

00:04:22.320 something that can happen over time, as we see an erosion of things like the minor injury regulation. So it's just a,

00:04:31.200 it's a building on a compounding of a problem that has happened. It's happened in other jurisdictions as

00:04:37.080 well. And that's where government can look to make reform. Because if you want to lower the price of

00:04:42.360 auto insurance, the only thing you can do is pull costs out of the system. And one of the main levers

00:04:48.260 government has is going through the litigation, where ultimately, all these costs are flowing, but we're

00:04:54.800 not seeing better outcomes for injured drivers because of it is costing a lot of money without that

00:05:01.060 resulting improvement in the system.

00:05:04.120 Okay, sounds good. Okay, well, then my next question would be, the regulations for the care first system

00:05:12.440 have not been completely introduced yet. So then, can you give us an idea of what it's going to look

00:05:18.280 like? And also, on top of that, I wanted to know more about the lifetime medical coverage, and if it's

00:05:24.280 insured that the person would get said coverage?

00:05:27.040 Oh, absolutely. So the regulations coming will deal with the actual coverage, the sub limits, it will deal

00:05:37.200 with things like dispute resolution. But today's product, if you're injured in a vehicle, you will

00:05:44.040 have $50,000 of coverage for two years. That's the max. Under the new system, it'll be unlimited for your

00:05:50.700 lifetime, which is similar to what we would see in Saskatchewan, Manitoba, BC, when it comes to

00:05:56.940 accident benefits. That's a significant change. And even though you are getting these improved

00:06:03.300 benefits, it's actually at a lower cost.

00:06:05.560 Okay, yeah, that makes sense. So these, the coverage that the person would get under the

00:06:12.680 care first system, that would be coming from their own insurance, correct?

00:06:16.700 That's correct.

00:06:17.680 Okay. And so the only thing I would be concerned about is, like, how would they make sure that

00:06:24.940 the insurance will pay out? Like, could they litigate, say, if the insurance doesn't want

00:06:29.920 to pay out, for example?

00:06:31.860 Well, let's say, you know, you're receiving treatment, you had sort of a medium, maybe

00:06:37.040 a whiplash injury, you're going through treatment, and all of a sudden, your insurer says, you

00:06:41.580 know what, you're done, no more benefits. Well, first of all, the law says that the insurer

00:06:47.740 must pay out to the point where I'm trying to get the exact wording is, you reached full

00:06:54.420 medical benefit. So that will be up to medical professionals. If the insurer then is in disagreement

00:07:01.460 with the medical, or your own opinion, because you know your body best, you'll be able to

00:07:07.140 take that to a dispute resolution system that will happen within government. So it won't

00:07:12.200 be the insurers, it'll be a dispute resolution that's still to be set up in regulations. We

00:07:21.700 don't have a whole lot of detail other than what the government's put out to date. There

00:07:27.420 will be limited opportunities to sue in certain circumstances. But you would first go through

00:07:33.520 dispute resolution. If there's an error in administrative law, then that my understanding

00:07:40.260 is would be appealable. But you wouldn't be able to appeal something like your premiums,

00:07:46.240 like your premium, you feel like your premiums are too high, it would come down to a decision

00:07:50.440 that your insurer is making on your actual treatment. And again, you would be using your

00:07:55.760 own medical professionals, your own doctor would be involved in this. You could hire a

00:08:01.160 lawyer, potentially, if you wanted to, there's nothing that says that you can't. But it's

00:08:05.320 meant to be a process that Albertans can take themselves through. And there will be a brand

00:08:10.000 new consumer support function within the government of Alberta, that will help walk you through the

00:08:15.320 process.

00:08:16.320 Okay, that makes sense. And like more on the sorry, it's called like a kind of like a

00:08:21.320 tribunal type thing. So we're probably like Albertans will probably know more about it come

00:08:28.440 like this fall, correct?

00:08:29.640 Yes, that's correct.

00:08:30.640 Okay, and probably nothing until then, because they're probably still are they still talking

00:08:34.780 about it? Or is it just they're announcing it then?

00:08:37.040 Yeah, they're, they're drafting regulations right now. And my understanding is those will be

00:08:41.920 public this fall, but they're just the department is consulting right now.

00:08:46.160 Okay, cool. So my next question, I guess, yeah, let's just talk more, more about like litigation

00:08:54.160 and stuff. So what are the circumstances where Albertans under the care for a system could litigate?

00:09:02.000 So the government's indicated that you would be able to sue if let's say the other driver is convicted

00:09:08.560 of certain, like certain driving offenses under the criminal code or the Trade Traffic Safety Act,

00:09:15.200 those are still being determined, and again, will be in regulation that I imagine will be coming out

00:09:19.920 shortly. You would also be able to sue in the event that you need more benefits, let's say you've you've

00:09:27.360 reached a sub coverage limit, or out of out of pocket expenses. So let's say you had a catastrophic injury,

00:09:36.960 and you find that you need even more than what's in the new system, you would be able to sue the

00:09:43.520 other driver in that case. But government still has to put a box around exactly what that means. Because

00:09:50.800 the original model of the care first system was based on Manitoba, where there's no ability to sue under

00:09:57.120 any circumstance. By allowing even a little bit of litigation, premiums will go up. So it's how much

00:10:04.480 do you allow? And where is it beneficial for Albertans to actually still have that ability to

00:10:09.840 sue? Because even though people call it a no fault system, it's kind of a misnomer because fault very

00:10:16.160 much matters, very much matters in the claims process, and particularly in setting your premiums.

00:10:21.840 Because at fault drivers, even under the care first system will be paying more,

00:10:27.440 because they'll be penalized by their insurer when they go for a renewal.

00:10:32.720 Okay, yeah, that makes sense. Also to clarify, so like, yeah, I'm not sure about this. When like

00:10:41.280 drivers say like, it's not their fault. So then no, like the person at fault collides with another

00:10:47.360 one, and then they want to still sue the other person for damages. And but the person say there

00:10:54.400 was like no one on the scene. So then police did not give that person like a violation, like a ticket or

00:11:00.400 something like that. What would happen in that case?

00:11:05.840 Well, my understanding is that the system will require a conviction.

00:11:09.520 So not just a charge, but an actual conviction under those offenses that the government lays out.

00:11:16.160 So it's really to your benefit to ensure that, you know, that the police do respond.

00:11:21.520 Okay, so then, I guess the recommendation would be like, whenever you get into a crash, call the

00:11:28.880 police right away kind of thing.

00:11:30.080 Yes, you know, and the law, I believe, requires reporting over $5,000. I may have that incorrect

00:11:35.440 at the moment. But yeah. And you know what, it doesn't take much to cause $5,000 of damage to a

00:11:41.520 vehicle these days.

00:11:42.400 That's true. Okay. Oh, okay. I have one more question that just kind of came to mind. Like,

00:11:51.440 for example, like BC's, I forget what it's called, like, all care or something, insurance. Anyways,

00:11:58.240 they're no fault insurance like system. Do you think at all that it's similar to what Alberta is

00:12:04.880 going to put in place in 2027? Or what are like, also the differences that you can tell us about?

00:12:10.080 Well, the main difference would be our benefits are slightly higher when it comes to things like

00:12:15.520 income replacement, because we, you know, there's a higher average income in Alberta. I'm not

00:12:23.120 familiar enough with their system to say how much they allow for lawsuits. But dealing with a public

00:12:29.600 insurer is slightly different than we've got a number of private insurers, there's about 29 insurers

00:12:35.680 writing in Alberta right now for private passenger vehicle. So the big shift, it was going to take a

00:12:41.120 big cultural shift from the insurance companies to go to this new care first model. But we are

00:12:46.400 learning from ICBC, and the department has been talking with them, as well as Manitoba and Saskatchewan,

00:12:53.120 those being the other care first systems, to get an understanding of the how they handle these

00:13:00.320 claims, what kind of training is required. And we're using a lot of their data when it comes to pricing as

00:13:07.280 well. Okay, okay, yeah, that makes sense. So anyways, I appreciate you coming and like, being a part of

00:13:15.120 this interview. And also, yeah, that's about it. So thank you again, Heather. Good talking with you.

00:13:23.360 Yeah, you too.

Western Standard - September 04, 2025

Alberta's automobile insurance regulator weighs in on care first system

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