Insurance premium hikes will jolt drivers. Does promise of future savings make it all worthwhile?

When the government touts that its auto insurance reforms might curb premiums by $400 come 2027, the ministers and premier don't readily mention what's to come in the three years leading up to that.

For this year and the next two, Alberta is permitting annual rate increases of 3.7 per cent, 7.5 and 7.5 per cent, respectively. That amounts to about $325 more for the average driver.

Steps forward, steps back.

Except there are no guarantees the $400 savings will come at the end of this overhaul; that will depend on as many economic factors as actuaries can calculate.

Even if Alberta heavily regulates auto insurance, it can make no guarantees of what costs the free-market businesses will need to cover in a few years' time. 

"We regulate this industry, but it isn't magic," Finance Minister Nate Horner said. 

The Smith government froze rates in 2023 — a provincial election year, like 2027 will be. Its 3.7 per cent rate cap this year didn't do enough to ensure the sector remained profitable after recent hail storms and other rising costs, so Horner said he'd let companies charge much more over the next few years, even if the industry had asked for no rate cap at all.

"We're stemming the bleeding of the insurance companies so they can provide this, because we wouldn't be able to build [a new system] in time, even if we wanted to," he told reporters this week.

Alberta's reforms to the current private system are expected to induce bleeding in another sector — the personal injury lawyer realm, which will be decimated under the planned system in which accident claim lawsuits are all but eliminated. A government-commissioned report has forecast 650 to 800 job losses in the legal sector (lawyers, paralegals and other support workers), as well as up to 1,000 jobs in other areas.

"The reality is this one's an industry killer," said Mark McCourt, a veteran injury lawyer. He quipped that he'll have to find "honest work" in a couple years, barring some major concessions or a full policy U-turn by Premier Danielle Smith.

He fought bitterly against the last major Alberta system reforms, two decades ago when Ralph Klein's Tory government imposed a new premium grid and set maximum payouts for minor injuries like whiplash.

McCourt credits a then-younger Calgary Herald columnist in 2003 for persuading Tory MLAs to soften their reforms. Her byline was Danielle Smith.

She'd written that a plan for compensation limits on a wider set of injuries "stinks," and that in a proper Alberta insurance reform, "preserving the rights and interests of victims must be the starting point."

In 2024, that same Danielle Smith has pledged to remove the right of victims to sue except in cases where the at-fault driver is convicted of a major offence, like impaired driving — a conviction that would occur long after a crash victim begins needing support.