Alberta Premier Danielle Smith says her government is making major changes to auto insurance, including allowing rate hikes and switching to a predominantly no-fault claims model.

Under the new system, car accident victims in most cases won’t be able to sue the party responsible for their injury and, instead, insurers would pay compensation at rates set by the government.

The province said it commissioned two auto insurance reports, which showed that legal fees and legal costs tied to the current system significantly increase premiums. The province added collision-related lawsuits have nearly doubled in Alberta between 2018 and 2022.

By cutting down litigation costs, the government estimates that when the new system is in place in January 2027, it could lead to savings of up to $400 per year for the average insurance premium.