Lawyer warns that if Alberta lifts insurance rate cap, costs will rise “astronomically”

Some critics are warning that if Alberta bows to the insurance industry’s lobbying to lift the existing rate cap, consumers would face sky-high costs with little recourse for relief.

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Some critics are warning that if Alberta bows to the insurance industry’s lobbying to lift the existing rate cap, consumers would face sky-high costs with little recourse for relief.

Lawyers and consumer advocates warn that a rate cap lift would leave Albertans exposed to rising costs and strip away key avenues of accountability.

The Insurance Brokers Association of Alberta recently issued a call to lift the cap as the province transitions to Care-First. Brokers frame the cap as a market distortion, while insurers stand to benefit from higher rates and profit margins.

The Insurance Bureau of Canada (IBC) echoed the demand, urging the government to scrap the cap and limit Albertans’ right to sue under Care-First. “We implore the government to lift the rate cap so that competition and choice can return to the market,” said IBC spokesperson Lana Weller-Hannaway.

Currently, the Alberta Good Driver Rate Cap limits increases to 5 per cent annually, with an additional 2.5 per cent rider for natural disaster-related costs, for a total of 7.5 per cent in 2025.

The cap was introduced in 2024 following a year-long freeze on rate hikes.

Steven Breslauer, a Calgary-based personal injury lawyer told True North the industry’s push would lead to runaway costs.

“If that rate cap comes off completely, the rates are going to go up astronomically, and there’s going to be no recourse at all to sue for people,” he told True North. “It’s a complete disaster, really.”

Breslauer warned that Albertans are legally compelled to carry vehicle and home insurance, leaving them no choice but to accept higher costs.

“If there’s no cap and there’s no protection, they can charge whatever. It’s predatory. And there is no recourse,” he said.

The province has touted Care-First as a consumer-friendly alternative to Manitoba’s no-fault system, promising faster payouts and less litigation.

However, Breslauer argued the model strips rights. “All this is, is a no-fault insurance scheme,” he said. “You’re stripping an injured party’s right to sue and effectively allowing a bad driver the ability to walk away scot-free”.

Critics note that while Manitoba, Saskatchewan and British Columbia run no-fault insurance through public crown corporations, Alberta is poised to give greater control to private insurers. The Alberta government has denied claims that the new system was a “no-fault” scheme.

Breslauer called it “very shocking that our conservative government would strip the rights of everyday Albertans and give handouts to privatized insurance companies”.

The industry has pointed to inflation, legal costs and extreme weather as drivers of higher premiums, but critics counter that insurers are shifting the goalposts.

Earlier this year, the Alberta Superintendent of Insurance found Albertans were overcharged by $3.1 million above approved rates.

“Insurers are notorious for gouging, denying claims that are meritorious, and paying out as little as possible,” Breslauer said. “If you deregulate this by lifting rate caps and removing accountability under Care-First, you’re exposing the everyday consumer to predatory pricing, again with no legal recourse”.The Care-First system is expected to take effect in about 18 months, though its final design has not been confirmed.