What worries Intact about Alberta auto reform

Alberta auto insurance reform is in the works, but in the meantime, Intact Financial Corporation is worried about ‘core pressure’ building in the system.

Alberta’s provincial government passed Bill 47, the Automobile Insurance Act, on May 15. Among other changes, the bill establishes a framework for “improved access to health and medical benefits for Albertans injured in vehicle collisions.” This hybrid no-fault model, dubbed Care-First, is expected to take effect Jan. 1, 2027.

Alberta’s rate cap for good drivers currently prohibits premium increases above 5% until 2027 (up from 3.7% previously). There’s also an additional 2.5% NatCat surcharge in effect until 2026; it’s unclear if it will be renewed.

“[In] Alberta, even though the cap is higher and you have a reform in the pipeline for 2027, we’re a bit worried for the market about the trajectory over the next two years,” Intact Financial Corporation CEO Charles Brindamour said during the company’s 2025 Q1 earnings call earlier this month. “That’s why we’re working very closely with the Government of Alberta to make sure that they have options and solutions if the pressure [is] building before the date of the reforms themselves…”

Guillaume Lamy, Intact’s senior vice president of personal lines, says there’s core pressure in the Alberta auto market.

“I think industry profitability is deteriorating, and we’ve seen recently some competitors showing increased signs of capacity issues above and beyond what we’ve seen last year,” he said during the earnings call. “It’s clear that the current situation is not viable.”

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Although the latest rate cap increase has “released some pressure, there’s still pressure building up in the industry,” Lamy says. “So, we believe it’s very important for the government to allow the industry to get back to rate adequacy on both new business and renewals before the reform by eliminating the existing rate cap in place.

“Otherwise, capacity will keep deteriorating, which is not a good outcome for anyone — consumers, government, or insurers.”

When it comes to comparing the state of Alberta auto versus auto insurance in other provinces, Brindamour puts it starkly: “I would put personal automobile in two buckets,” he says. “Alberta — which is a problem, and has been a problem for some time — and then the rest of Canada…”

The good news, Lamy says, is “from a rate regulation perspective, this is even becoming more and more flexible in some [other Canadian] markets. So, I think the trend overall there is positive.”

Alberta’s auto reforms

Regarding Alberta’s auto reform measures, Lamy says they’re “addressing the right issues from a fundamental perspective, and certainly a major step in the right direction. But we think there’s still actions that need to be done before we get to that reform.”

Insurers in general welcomed the passing of Alberta’s Automobile Insurance Act. But Insurance Bureau of Canada (IBC), the trade association representing the majority of Canada’s home, auto and commercial insurers, says the government must remain steadfast in eliminating the “sky-high legal costs” plaguing the current system.

“For the system to be successful and deliver savings to Alberta drivers, the government will need to strike a balance between the benefits provided to those injured in collisions and the amount of litigation that remains in the system,” Aaron Sutherland, IBC’s vice president for the Pacific and Western regions, says. “The evidence is clear — the more lawyers are involved in the auto insurance system, the less money drivers will save.”

Fixing challenges in the current system will be critical to the success of the new auto insurance model, he says.

“Alberta’s insurers are now in the third consecutive year of government rate caps and are paying out $1.17 in claims and expenses for every $1 earned in premiums. This is not sustainable,” Sutherland says. “The rate cap has undermined the competitive market, forcing some insurers to leave the Alberta market altogether and causing confusion and frustration for drivers, who increasingly face challenges securing the coverage they need.

“As Alberta designs its new auto insurance system, it must work to attract auto insurers back to the province by leaving rate-setting to insurers, cutting red tape and letting the competitive market create the conditions for lasting affordability.”

Brindamour echoes that sentiment. “We want to grow in personal automobile, and it’s a very competitive marketplace,” he says.

“But the industry is losing money, not just in Alberta, in aggregate across Canada. And I think regulators understand that, and in many jurisdictions, they’re focused on the root cause of cost. So, I think overall, it’s a constructive environment.”

Jason Contant

Jason has been an award-winning journalist with Canadian Underwriter for more than a decade, including the past three years as associate editor and, before that, as digital editor for seven years.