Actuarial Notes

Care-First Auto Insurance

By Treasury Board and Finance · Government of Alberta · 2025

Study guide: Exam 6C

The Government of Alberta's intentions paper describing Care-First, the auto insurance system it will introduce on January 1, 2027. Care-First will provide improved medical, rehabilitation and income support benefits for all Albertans injured in an accident, regardless of fault, while continuing to hold at-fault drivers accountable through higher premiums. Issued in August 2025 by Treasury Board and Finance, the paper is current as of July 25, 2025 and, in its own words, for informational purposes only and subject to change.

On the syllabus

  • Exam 6C — objective A1; the whole paper; replaces Alberta Auto Reform for Fall 2026.

Legal Notice

  • The paper gives an overview of the development of the new system; because the government continues to develop Care-First, its contents are subject to change, and what it says about the Automobile Insurance Act and its regulations is not legally binding on the Government of Alberta.

Executive Summary

  • What is "Care-First"?
  • Medical and rehabilitation benefits, today limited to $50,000 for up to two years, will have no overall monetary or time limits.
  • Income replacement, today the lesser of $600 a week and 80% of average gross earnings for up to two years, will be based on yearly employment income up to a maximum insurable $125,000 (2025) and payable to age 65.
  • A new permanent impairment benefit is added, and benefit amounts, not indexed today, will be adjusted annually.
  • By reducing litigation-related legal expenses, Albertans can expect stabilized rates and lower premiums for third-party liability (bodily injury) coverage.

Alberta Auto Insurance Today

  • Mandatory or "Basic" Coverages:
  • Optional Coverages
  • How does accountability or "fault" matter in today's auto insurance system?
    • A not-at-fault driver can sue for more through the courts, limited by the other driver's liability coverage; an at-fault driver has no one to sue and is limited to the $50,000 of accident benefits.
  • The system also rests on the "all-comers" rule, risk-sharing pools and the Grid, with prices regulated by the Automobile Insurance Rate Board (AIRB) and market conduct overseen by the Office of the Superintendent of Insurance.

Why does Alberta need auto insurance reform?

  • Rising Premiums
  • How do auto insurance premiums in Alberta compare to other provinces?
  • Insurance Company Profitability
  • Legal Costs
  • The single biggest reason for the growth in the price of auto insurance is the increasing cost of bodily injury claims; premiums rose from $643 in July 1992 to $1,703 in July 2024, 27% above inflation, and are the second highest in Canada after Ontario's.
  • Litigation expenses are estimated at around 30% of bodily injury claim costs, and the average bodily injury claim grew from just over $91,000 in 2020 to almost $180,000 in 2024; the paper calls reducing litigation "the only real way" to lower those costs (Litigation Costs).
  • The AIRB allows a profit provision of 6% of premium and, from 2024, can direct insurers to return premiums in exceptionally profitable years.

Care-First Auto Insurance

  • What's changing?
    • Physical damage coverages (collision, DCPD, comprehensive) remain the same; details are in the Automobile Insurance Act, which received royal assent in May 2025, and in future regulations.
  • What if I'm involved in a hit-and-run, or the at-fault driver does not have insurance?
  • Will the Care-First system support cyclists and pedestrians?
  • Will fault still matter?
    • Each driver's insurer pays their benefits regardless of who caused the accident (no-fault); at-fault drivers are held accountable through higher premiums.

A Comparison of Accident Benefits

  • Benefits will initially be set at Manitoba's levels, except income replacement, set $5,000 greater than Manitoba's; they will then be indexed annually for inflation.
  • The table sets each Care-First benefit against the accident benefits of the current system; insurers may offer higher coverage through endorsements.

Claims Process

  • Consumer Support
  • Insurers must inform and assist claimants and give written reasons for decisions; a claimant may seek the insurer's review within 60 days and then appeal to a new Alberta Automobile Care-First Tribunal.

Injury Management

  • Insurers will actively manage cases from claim initiation to closure, aiming to return claimants to pre-accident function; claimants must actively participate in their recovery.
  • Government will provide tools — evidence-based care and treatment programs, a case management model, provider reporting templates — and a process for expert medical assessments.

Medical and Rehabilitation Benefits

  • Personal Care
    • Up to $6,781 a month for catastrophic injuries and $5,671 for non-catastrophic; "catastrophic" will be defined in regulation.

Permanent Impairment

  • Ineligibility for Permanent Impairment
  • A lump sum of up to $298,520 for catastrophic injuries, and $944 to $189,055 for non-catastrophic ones.

Income Replacement

  • Full, part-time and temporary earners, including self-employed
    • 90% of net income, up to a maximum income of $125,000 a year (2025), after a seven-day waiting period.
  • Income Replacement (after age 65)
    • At 65 it switches to a Retirement Income Benefit of 70% of net income, less other pension income.
  • Unemployed
  • Retired prior to accident
  • Family Business
  • Students and Minors
  • Ineligibility for Income Replacement
  • End of Income Replacement Benefit
  • Caregiver Benefit

Childcare Reimbursement

  • For those caring for children under 16, with receipts: $143 to $283 a week, by number of dependants.

Other Expenses

  • Meal Allowance
  • Travel Allowance
  • Critical Care Attendance
  • Clothing Allowance

Death Benefits

  • Funeral Expenses
  • Grief Counselling
  • Lump sums to family: a spouse or partner receives $75,623 to $600,000, tied to the deceased's gross annual income.

Fee Schedules

  • The Minister is authorized to set fees, including maximum fees, for health care services under Care-First; schedules will follow further consultation.

Dispute Resolution

  • Benefit decisions can be disputed at the Alberta Automobile Care-First Tribunal, whose decisions are final and binding and cannot be appealed, though they may be subject to judicial review.

Access to Court

  • Albertans can still sue an at-fault driver for pain and suffering where the driver is convicted of listed Criminal Code or Traffic Safety Act offences, and for out-of-pocket expenses beyond their policy's benefit limits.

Implementation

  • Care-First comes into force on proclamation of the new Automobile Insurance Act, anticipated for January 1, 2027.

Related readings

  • Alberta Auto Reform — the objective A1 reading it replaces for Fall 2026

Sources