Bill 47 to Reform Handling of Automobile Insurance and Accident Cases in Alberta
During the afternoon legislative session of March 24, 2025, the Alberta Legislature had their first reading of Bill 47, the Automobile Insurance Act (the “Act”) – the legislation aimed at reforming and restructuring Alberta’s automobile accident landscape into a privately delivered no-fault system.
The Bill revealed several aspects of the proposed reforms which, if passed into law, would significantly alter the way automobile insurance and accidents are handled in Alberta, namely by barring a notable share of bodily injury claims currently entering the Court system. Bill 47 can be accessed through the Alberta legislative website and is presently available at the following link. We note that there will be further readings which may modify any of the provisions in the current draft.
If passed, the new legislation is set to come into force on January 1, 2027, but it is anticipated the full transition to the no-fault system will take much longer than that. The Bill explicitly provides that the Insurance Act and its regulations continue to apply to any bodily injury or death sustained by an insured in an accident that occurs before January 1, 2027. This means the new changes (as drafted) will have no effect on motor vehicle accidents that occur before that date. As such, we can continue to expect “grandfathered” personal injury claims to be filed until December 31, 2028, and served up to December 31, 2029, in accordance with the Limitations Act.
We will continue to monitor and update on the progression of Bill 47 through its readings and committee. We highlight some of the new legislation’s numerous proposed changes below.
Part 2 Benefits – An Overhaul of Section B Benefits
Of particular note, the proposed legislation at Part 2 aims to provide the following, with respect to benefits:
- An insured is entitled to payment or reimbursement of reasonable and necessary expenses incurred by the insured because of the insured’s bodily injury. An insurer can obtain, at their expense, an independent medical assessment to confirm the reasonableness and necessity of a particular expense. However, the initial (reviewable) decision as to whether a particular expense fits the reasonable and necessary threshold rests largely with the insurer, leaving them with a potentially high degree of discretion to approve or deny benefits, including for expenses incurred by an insured to assist with activities of daily living.
- Income replacement benefits will be more comprehensive than the former Section B regime and aims to provide for more flexibility for insurers to decrease or increase benefits in line with an insured’s particular circumstances. For example:
- The Bill provides that if an insurer reasonably determines that an insured was regularly unable, before an accident, to hold employment for any reason except age, the insured is not entitled to an income replacement benefit or a retirement income benefit.
- If an insured willfully (as opposed to negligently) caused the accident at issue, an insurer may reduce, suspend, terminate, or refuse to pay compensation for virtually any benefit under the proposed legislation. Otherwise, the Act directs insurers to pay compensation benefits regardless of who is at fault for the accident, which is consistent with other no-fault regimes.
- The proposed legislation would explicitly bar recovery for a loss of earning capacity, however income replacement benefits may be payable to the age of 65 in cases where a claimant remains unable to work. Claimants may also be eligible to a retirement income benefit after age 65, subject to regulations.
- If an insured sustains a permanent impairment as a result of an accident, the insured is entitled to a permanent impairment benefit. A similar regime exists in Saskatchewan, and this aims to directly compensate the insured for the permanent loss of function that they have experienced. It is paid as a lump sum and in this regard would be akin to general damages for pain and suffering. In Saskatchewan, permanent impairment benefits are determined using an actuarial table governing particular injuries, from scarring to lost limbs.
- While the legislation aims to provide a full view of how benefits will be handled, it is very likely further regulations will be required as insurers and claimants adapt to the new system, in order to clarify ambiguities inherent in the legislation.
Tort Bar Exceptions
Notwithstanding the broad prohibition against tort actions imposed by the Act, Bill 47 provides for certain exceptions.
The Act allows actions to be brought against the following persons but only for the recovery of non-pecuniary damages, specified to be general damages for pain and suffering, and punitive or exemplary damages:
- An at-fault driver whose operation of a vehicle causing the injury/damage results in their conviction of certain prescribed offences under not only the Criminal Code (Canada) and the Youth Criminal Justice Act (Canada), but also the Traffic Safety Act; and
- Prescribed third parties, including but not limited to automobile manufacturers, retailers, service/maintenance providers, liquor license holders, social hosts who invite guests to an event where liquor is served, and municipalities responsible for the road on which the accident occurred.
General damages awarded in these circumstances are subject to be reduced by the amount of the permanent impairment benefit to which the insured person is entitled.
Meanwhile, though the Act (in its current state) also permits actions to be brought to recover damages for pecuniary losses, it falls short of identifying against which persons such action may be brought. Generally speaking, the Act permits a person sustaining bodily injury or death in an accident to commence an action for essentially all “reasonably incurred” expenses in excess of the maximum amounts prescribed under the Act.
Notably, however, an action may be brought to recover a loss of earnings in excess of the maximum amount prescribed for the purposes of calculating an income replacement benefit, only if:
(i) the person receives or is entitled to receive an income replacement benefit under Part 2, and
(ii) at the time of the accident the person was earning income in excess of the maximum amount, as determined under the regulations;
Interestingly, the Act (if passed in its present form) purports to do away with joint and several liability as provided under the Contributory Negligence Act (i.e., the notion that the injured party may recover any or all portion of damages from any one of the tortfeasors), and, instead, limits (both non-pecuniary and pecuniary) damages that may be awarded against the at-fault person to their proportionate degree of fault. It also absolves those who would otherwise be held vicariously liable for the actions of the at-fault driver from any such liability.
The Alberta Automobile Care-first Tribunal
The Act establishes a Tribunal to handle appeals from a decision made by an insurer in respect of a claim for compensation under Part 2. The Tribunal will be made up of persons appointed by the Minister of Finance, comprising one Chair, and at least one Vice-Chair, in addition to an unspecified number of other Members.
Decisions and Appeals
Once an insurer has issued a written decision in respect of a claim, a claimant who disagrees with the insurer’s decision may either apply to the insurer for review or reconsideration, or appeal that decision to the Tribunal.
Insurers are able to reconsider or review decisions in light of new evidence, or if an error was made in the original decision. Where an insurer determines that new information or an error affects the original decision, the insurer may vary that decision, and issue new written reasons. Once a claimant receives a written decision, they will have 60 days to apply in writing to the insurer for a review, and the insurer will then be required to issue a review decision within a period of time yet to be set by regulation. While a decision is under review, an insurer is required to continue paying the benefit at issue until the review decision has been issued. Notably, a claimant is not required to have a decision reviewed before they are permitted to appeal the decision to the Tribunal, and they are also permitted to appeal from an insurer’s original decision, reconsideration, or review decision.
The Tribunal is granted full authority to examine, inquire into, hear, and determine all matters and questions arising in an appeal. Similar to other administrative boards, the Tribunal will have the ability to set its own rules with respect to notice requirements, the appeal process generally, types and format of materials to be considered, and how appeals are to be conducted (i.e. in writing, by videoconference, email or other means).
Other powers granted to the Tribunal include the ability to accept appeals that fail to meet the timing or other requirements (if provided a satisfactory reason), and to also summarily reject matters that appear frivolous or vexatious. The Tribunal will have the ability to attempt to assist the parties with settling a matter, including potentially ordering that the parties attend mediation. This appears to be the case regardless of whether the parties have already attempted any form of alternative-dispute resolution or mediation prior to commencing the appeal process.
To assist with deciding an appeal, the Tribunal will be able to seek independent medical advice regarding a claim or may order a claimant to undergo further medical examinations, the costs of which may be ordered to be paid by the insurer.
Appeals will be heard by between one and three members, who may accept any evidence they consider appropriate, whether or not it would be admissible in court, and the member/panel will not be bound by the law of evidence applicable to judicial proceedings. The member/panel may issue interim directions pending a final determination of the appeal, and the appeal decision will either confirm, reverse, or vary the Insurer’s original decision.
While decisions and orders made by the Tribunal will be considered final and conclusive, a claimant or Insurer may file an application for judicial review of either an order or decision within 30 days, to be heard by the Court of King’s Bench. This would include the ability to seek judicial review of the orders mentioned above, such as an order directing the parties to mediation, or an order that an insurer pay the costs of an independent medical examination. The cost and effort of judicial review would often not be justified in those cases, but insurers should keep in mind that the option is there. While the language of the Act is not entirely clear as to whether judicial review would be available with respect to a Tribunal’s choice to summarily reject an appeal for being frivolous, vexatious, or an abuse of process, it seems likely that these types of decisions will also be subject to judicial review.
While it is hard to gauge at this stage, we predict that the Tribunal process, along with the removal of the ability to sue for the vast majority of motor-vehicle accidents, will result in streamlined processes. Decisions as to permanent impairment benefit assessment, reimbursement of expenses, medical rehabilitation, and income replacement will be primarily given to the private insurers implementing the new scheme, as opposed to the current system in Alberta allowing litigation against an at fault driver.
Bill 47 passing the first reading this week is just the first step in a lengthy process towards a privately delivered no fault system in Alberta. There are still a lot of details that need to be worked out and we expect further changes to the proposed Act in the coming weeks and months.
If you have any questions about this topic or need further assistance, please reach out to our Insurance Defence team.
This article pertains to a piece of evolving legislation and the information and analysis herein remains subject to change.