The Future of No-Fault Insurance in Alberta
Western Financial Group’s VP of National Insurance Operations, Bart Robinson, is featured in Canadian Underwriter’s What’s on Dec? podcast, where he uncovers the latest trends and changes in Alberta's auto insurance market. From rate caps and consumer loyalty to no-fault schemes and public auto options, this interview is packed with insights that matter to brokers and consumers alike.
Tune in to hear about:
- The impact of rate caps on consumer behaviour
- The future of no-fault insurance in Alberta
- Public auto insurance
- Current trends and broker-government discussions
Visit Canadian Underwriter to listen and learn more
Changes to Alberta auto insurance came into effect at the beginning of 2025, with a 5% rate cap plus an additional 2.5% increase allowed for NatCat-related losses.
But some good drivers are upset about increases exceeding the rate cap, especially those with a clean driving record.
In our inaugural What’s on Dec? video podcast, Bart Robinson, vice president of national insurance operations at Western Financial Group, discusses the state of Alberta auto. In particular, he dives into the rate cap and the challenges associated with it.
Bart explains why brokers are confronted with increased underwriting restrictions, making it difficult for some drivers to obtain physical damage coverage.
He also discusses the move to a no-fault model in 2027 and shares his thoughts on whether public auto is an option in the province.
Intro | Jason Contant:
Hi, I’m Jason Contant. I’m an associate editor at Canadian Underwriter and host of our podcast series, “What’s On Dec?”. I sat down with Bart Robinson from Western Financial Group to discuss Alberta auto insurance. I talked to Bart about three things: how brokers are facing increased underwriting restrictions, why some good drivers are upset about the rate cap, and why more insurers could leave the province.
Jason Contant:
Today we’re going to be discussing Alberta auto. We’re going to get into things like the rate cap, no-fault scheme, even thoughts on whether public auto is an option in the province. And just to set the stage a little here, I’ll give you a quick summary of some of the changes that are going on in the industry. As of the beginning of this year, January 1st, insurers can increase auto rates 5%, and that’s up from 3.7% previously. And on top of that, there’s also an additional 2.5% that they can increase due to NatCat related losses and costs. So in total, I guess you can increase up to 7.5%. Now, when it comes to no-fault, the government plans to introduce a no-fault model in 2027, and there’s going to be exceptions as well. One of them will be for catastrophically injured victims, who will be allowed to sue, as well as drivers who have been the victim of an at-fault driver who committed a criminal offence, they can sue as well. So that’s just a very brief high-level overview of some of the changes going on with Alberta auto. And to discuss it with me today, I have Bart Robinson, who’s the vice president of national insurance operations at Western Financial Group. So Bart, thanks for joining me today.
Bart Robinson:
Thank you for the invitation, Jason. I’m excited to have this opportunity.
Jason Contant:
Yeah, me as well. So I guess, first question, the most obvious one that I can think of is sort of as a broker, how are you finding the changes are affecting your clients?
Bart Robinson:
You know, Jason, I would say Alberta auto insurance is both confusing and frustrating. I can give you a couple examples of that. First one would be the unexpected rate increases for those classified as a good driver. There’s a number of good drivers in Alberta who are upset with the rate increases that exceed the rate cap, especially those who have maintained a clean driving record. You know, a few situations that might cause unexpected rate increases and the loss of the rate cap could include, you know, a vehicle being added or substituted during a policy term, adding a new driver with a worse driving record or higher overall risk rating, or even change of an insurance company. The other example would be challenges some people are facing trying to get physical damage coverage. In addition to a few insurers exiting the Alberta market due to the rate cap, brokers are now confronted with the increased underwriting restrictions. This is making it difficult for some drivers to obtain physical damage coverage. A couple rules that I’ve seen for declining physical damage coverage include two or more minor convictions within the last three years, or one or more major convictions within the same period. So the pressure from the rate cap is prompting insurers to implement these changes to mitigate their exposure.
Jason Contant:
So, when it comes to the rate cap, are you seeing more loyalty now to insurance companies because, you know, clients aren’t shopping around as much?
Bart Robinson:
From what I know, the rate cap on auto insurance premiums has affected drivers in really two different ways. The first one is those drivers classified as a good driver and able to obtain physical damage coverage, the cap has reduced the incentive to shop around as potential savings are minimal, and the factors that could lead to premium increase is greater than the 7.5% rate cap related to changing insurance companies. But then the opposite also holds true as those not classified as a good driver and/or not able to obtain physical damage coverage, these drivers, their situation is different. That leads to shopping around for better rates. And although the Alberta Automobile Insurance Rate Board has capped rate hikes at 10% within a 12-month period, insurers can distribute those increases differently. And consequently, drivers not seen as a good driver may face premium hikes exceeding 10%. That’s prompting them to seek more affordable options. And then drivers who are unable to secure physical damage coverage, they’re frustrated and they may also seek alternative solutions and shop around.
Jason Contant:
You know, it’s confusing for clients and that. I was wondering if we could sort of get into why, you know, or what you can do to help clients that are confused about the rate cap or, you know, they may not be a good driver. Like how do you deal with that, right?
Bart Robinson:
Yeah, so I think it’s good for Alberta drivers. It was time for an update and the new Care-First model is a made-in-Alberta solution for Albertans. I feel that the government’s care model for auto insurance is the best option, providing the best care and support to individuals involved in collisions, while offering opportunity for savings.
Jason Contant:
What do you find is the current impact of the cap? How’s it working out for consumers?
Bart Robinson:
I feel the impact of the government-imposed rate cap combined with the escalating repair and legal costs is creating a crisis. And the risk is that more insurers start to leave the province. And this will obviously make it harder to find affordable auto insurance, although I think most drivers can still access auto insurance. But the longer the rate cap stays in place, the harder it will be for some insurers to justify offering auto insurance. Ultimately, less competition or choice is worse for Alberta drivers.
Jason Contant:
Is public auto an option?
Bart Robinson:
Sure, I feel that the community-based expertise of brokers combined with the infrastructure and technology investments of our insurance providers would be hard to replicate without tremendous startup costs and operating costs. So that would be borne by the Alberta government and the province’s drivers.
Jason Contant:
And so another question I had is, I know obviously brokers and broker associations, stuff like that, will work with the government at different levels, right? So is there certain things that you find brokers are talking to the government about now when it comes to Alberta auto?
Bart Robinson:
Those that I’ve spoken to are actively engaging with government and industry stakeholders on several key issues related to auto insurance. A few that come to mind is auto insurance reform, you know, discussing the upcoming transition to the Care-First model to take place in 2027, ensuring that there’s a system balance between cost savings with adequate compensation and care for accident victims. There’s rate cap adjustments, proposing modifications to the current rate cap on auto insurance premiums, addressing concerns about the financial strain on insurers, on the reduced market competition. And then there’s consumer education, enhancing consumer education on auto insurance to boost transparency and to help consumers understand their insurance options and face, you know, factors that are influencing their premiums.
Jason Contant:
So, what are some of the trends that you’re seeing in Alberta auto?
Bart Robinson:
There’s a number of key trends that are shaping the auto landscape in Alberta. Three that come to mind is telematics. There are an increasing number of drivers choosing telematics, which leverages their data from driving behaviour to determine premiums, which is motivated by potential cost savings and more individualized insurance rates. We’re seeing an increase in support for credit consent. Many Albertans, you know, appreciate the potential for lower premiums when credit scores are factored into their insurance pricing. This is particularly beneficial for those with good credit. The last one I would say is claims costs and loss ratios. You know, it was reported that the 2024 margin trend report of the Alberta Auto Insurance Rate Board stated that the industry loss ratio for private passenger vehicles in Alberta was 68%. And although this is manageable, it continues to pose challenges for insurers in balancing the premiums and claims costs. And claims loss ratios have been on a gradual rise as the market adapts to post-pandemic conditions.
Outro | Jason Contant:
That wraps up today’s episode on Alberta auto insurance. We hope you found the discussion insightful. Thanks for tuning in and we’ll see you next time on “What’s on Dec?”.
