LAHL: For Alberta, no-fault insurance is no solution

Karamveer Lalh is a lawyer with James H. Brown & Associates LLPWith affordability top of mind, auto insurance reform is again a hot topic in Alberta. The Government of Alberta is now considering a shift to a no-fault insurance model delivered by private insurers to reduce premiums. While lowering costs sounds appealing, a privatized no-fault system poses serious drawbacks, undermines Albertans’ rights and leaves the most vulnerable without sufficient support. We need only look at British Columbia to see how no-fault insurance harms everyday citizens. Alberta risks these same issues, compounded by a private, profit-driven structure. While most Albertans have no issue with corporations earning a profit, they also recognize that government interference in markets and the courts can lead to unintended consequences.No-fault insurance promises to cut costs and improve efficiencies, but it does so at the expense of accountability. In British Columbia’s public model, many crash victims already face inadequate compensation and treatment delays. In a private model, where profits take priority, the dangers are even more significant. Private insurers may keep costs down by reducing payouts or restricting access to essential care — leaving victims unsupported and insulating reckless drivers and their insurers from responsibility.Economist Jack Mintz highlights that 16 U.S. states adopted private no-fault insurance with initial premium savings, only to see those savings vanish over time, leading four states to abandon the system entirely. The evidence that privatized no-fault systems can deliver lasting cost reductions is mixed at best. What is clear is that it would create a system where private insurers hold all the cards, while injured drivers face fewer options for recourse.No-fault insurance shields reckless drivers from accountability, effectively forcing responsible drivers to subsidize others’ negligence. In British Columbia, 85% of respondents in a recent poll said they support the right to sue ICBC if they believe their care is inadequate. Albertans would likely face even more challenges under a private model, as private insurers are not subject to the same public scrutiny or oversight as a crown corporation, leaving consumers with little recourse for inadequate support.Where no-fault systems have been implemented elsewhere in Canada, victims can only sue, if at all, for injuries if the at-fault driver is criminally convicted — regardless of how severe the injury’s impact on their lives. Albertans shouldn’t have to rely on our already overburdened criminal justice system to regain the right to fair compensation, especially under a model driven by private profits rather than public accountability.Our existing system does need reform. Minor injury claims that resolve quickly or with minimal treatment shouldn’t go through the courts. Current guaranteed accident benefits, offered regardless of fault, are inadequate for drivers in single-vehicle accidents or those who hit an animal. Albertans should have the option to tailor their benefits to fit their specific needs and circumstances.As an easy example, currently, every policy offers an injured Albertan (who was working and is now unable) the lesser of $600 a week or 80% of full-time wages regardless of their fault in an accident. For seniors on fixed incomes, this coverage may not be necessary, as it only kicks in if someone misses work due to injury. Meanwhile, workers without employer-provided disability plans may find $600 per week grossly inadequate. Offering Albertans meaningful choices in coverage would boost their confidence in the insurance they purchase, as they could ensure their policies provide genuine protection.Albertans consistently agree that those with lifelong or catastrophic injuries should have the right to seek fair compensation. With appropriate reform, we could ensure that the most vulnerable receive fair compensation while reducing frivolous claims, ultimately lowering premiums. Privatizing no-fault would strip away the ability to pursue justice and would sell off Albertans’ rights for temporary savings that history shows won’t last.Sacrificing Albertans’ rights to fair compensation and court access is not worth the minor, and likely temporary, premium reductions a privatized no-fault system might offer.Insulating negligent drivers from consequences eliminates incentives for safe driving. The result? More accidents, more victims, and a justice system that fails those it’s meant to protect. Albertans deserve an insurance model that operates efficiently while respecting their fundamental rights. A privatized no-fault system fails to meet these essential standards.Real reform should target inefficiencies while safeguarding accident victims’ rights. The government’s role is to balance affordable premiums with access to justice. Achieving meaningful change will require a collaborative approach that protects the interests of all Albertans.Karamveer Lalh is a lawyer with James H. Brown & Associates LLP.