Alberta’s Bill 39 revises the Insurance Act across several lines of business, with its central change in automobile insurance. It requires insurers to use rating programs approved by the Automobile Insurance Rate Board, subjects both basic and additional coverage to regulatory oversight, and allows the provincial government to set premiums directly for any period it considers appropriate.
The Act also changes capital and investment rules for reciprocal insurance exchanges, expands information demands on insurers, updates licensing provisions, and gives the government broader authority to prescribe home-warranty insurance terms. The result is a wider regulatory framework, but not a single-purpose auto-insurance measure: insurers must track obligations across pricing, solvency, governance, reporting and product design.
At a Glance
What It Does
The Act replaces the former split between regulated basic coverage and largely filed additional coverage with a framework requiring insurers to base premiums for both on rating programs approved by the Automobile Insurance Rate Board or on amounts set by the Lieutenant Governor in Council. It also authorizes maximum premiums for basic coverage and permits the Superintendent to establish binding written procedures for calculating charges, discounts and surcharges.
Who It Affects
Automobile insurers, reciprocal insurance exchanges, the Automobile Insurance Rate Board, the Superintendent and the Minister of Finance face the most direct operational changes. Consumers buying mandatory liability coverage, collision coverage or other supplemental products, as well as new-home owners and warranty providers, are affected indirectly through pricing and coverage rules.
Why It Matters
The Act moves Alberta toward active approval and information-based supervision of auto-insurance pricing rather than relying primarily on annual government-set basic premiums and post-filing review of additional coverage. It also gives regulations and administrative procedures a larger role, making future requirements highly dependent on subordinate rules and regulator-issued processes.
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What This Bill Actually Does
For automobile insurance, Bill 39 creates a common pricing architecture for basic and additional coverage. An insurer cannot charge either type of premium unless it uses a rating program approved by the Automobile Insurance Rate Board or follows an amount set by the Lieutenant Governor in Council.
Basic coverage remains subject to a regulatory maximum, while insurers may charge less than the approved or government-determined amount. The bill also allows regulations to require detailed rating programs, reports and supporting information, and to control how the regulator uses and keeps that material confidential.
The Act gives the Superintendent a practical role in translating approved prices into customer charges. Written procedures may govern how an insurer applies the relevant premium, discount or surcharge to an insured or applicant, and those procedures do not have to proceed through the ordinary Regulations Act process.
At the same time, the bill repeals the existing provisions dealing specifically with additional-coverage filings and the Board’s review of whether those premiums follow appropriate actuarial principles. The replacement is broader approval authority, but its day-to-day content will depend substantially on regulations and Board practice.Outside auto pricing, the bill updates the financial supervision of reciprocal insurance exchanges.
Alberta-based exchanges must invest their funds under the same investment framework that applies to provincial companies. Their guarantee-fund calculation changes by deducting unearned premiums and adding a prescribed amount, while reserve-fund assets cannot be counted again toward the guarantee fund.
Exchanges must also provide information the Minister requires about market conduct and for analytical or policy-making purposes.Other amendments modernize insurer administration and clarify several Insurance Act rules. Federally authorized companies are added to a provision dealing with licensing capital, licence terms become matters set by regulation, and non-provincial insurers must report incorporation changes and certain compliance undertakings within seven days.
A provincial company’s chief executive officer must be ordinarily resident in Canada but no longer must come from the board. The Act also replaces references to “book value” with “market value,” adjusts certain creditor-payment rules, and removes the statutory framework authorizing regulated complaint-resolution systems under section 612.The bill separately revises Alberta’s home-warranty insurance framework.
It identifies licensed insurers and prescribed persons or classes as potential warranty providers and authorizes regulations on mandatory policy conditions, coverage limits, exclusions, waivers, definitions and terms that cannot appear in a home-warranty contract. Most provisions require proclamation, while the licence-term and related regulation provisions in sections 3 and 5 take effect on January 1, 2016.
The Five Things You Need to Know
Insurers must base premiums for both basic and additional auto coverage on a rating program approved by the Automobile Insurance Rate Board or on an amount set by the Lieutenant Governor in Council. Basic-coverage premiums also cannot exceed the applicable regulatory maximum.
Regulations may require insurers to submit rating programs, reports and other information in specified forms and at specified times, and may govern the confidentiality and use of those materials.
The Superintendent may issue written procedures for applying approved premiums, discounts and surcharges to individual policies or applicants. Those procedures are expressly exempt from the Regulations Act.
An Alberta-based reciprocal insurance exchange must invest its funds under the investment rules that apply to a provincial insurance company, while its guarantee fund must account for unearned premiums and a prescribed additional amount.
The Act authorizes regulations governing home-warranty insurance contracts, including mandatory conditions, minimum coverage limits, permitted exclusions and terms that warranty providers may not include.
Section-by-Section Breakdown
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Insurance licensing, capital and reciprocal-exchange supervision
The opening amendments update general Insurance Act administration. They extend the licensing-capital provision to federally authorized companies, move licence duration to the regulations, and require most licensed insurers to report incorporation changes and certain compliance undertakings within seven days. The changes give the regulatory framework more flexibility, but they also shift important operating details from the statute into subordinate rules.
For reciprocal insurance exchanges, the bill recalculates the guarantee fund, prevents reserve-fund assets from being double-counted, and applies provincial-company investment rules to Alberta-based exchanges. The new information duty lets the Minister request material about market conduct and policy analysis, giving the department a broader supervisory view than financial solvency alone.
A new approval model for auto-insurance pricing
These provisions define “additional coverage” and “rating program,” then replace the former separate regimes for basic and supplemental coverage. The Board may approve rating programs for both categories, while the Lieutenant Governor in Council may set premiums for either category for any period it considers appropriate. Basic coverage remains subject to a maximum premium, and insurers may charge below the approved or government-determined amount.
The bill repeals the prior provisions requiring filing of additional-coverage schedules and allowing the Board to report premiums that appeared inconsistent with actuarial principles. In their place, regulations may prescribe the content, timing, handling and confidentiality of rating-program submissions and related reports. The change is therefore more than a terminology update: it replaces a filing-and-review model with a framework capable of prior approval and direct executive intervention.
Superintendent procedures for applying rates
The Superintendent may establish written procedures governing how insurers calculate what an insured or applicant must pay after applying the relevant premium, discount or surcharge. The procedures can cover basic and additional coverage and do not need to comply with the Regulations Act.
This creates an administrative implementation layer between an approved rating program and the price shown to a customer. Insurers will need controls that translate regulatory decisions into consistent policy-level calculations, while customers and advisers may need to distinguish between formal regulations and binding supervisory procedures.
Technical changes across insurance administration
These provisions make several unrelated but operationally relevant corrections. They replace “book value” with “market value” in specified financial provisions, broaden certain payments of insurance proceeds beyond the debtor insured to a jointly liable debtor, and adjust statutory wording on beneficiary designations and policy provisions.
The bill also removes the existing section 612 framework for regulations establishing complaint-resolution systems for disputes involving premiums, availability, fault and other insurance matters. The amendment does not itself create a replacement dispute process, leaving the statutory architecture for those mechanisms materially different from the one described in the former section.
Regulatory framework for home-warranty insurance
The Act amends the New Home Buyer Protection Act’s related Insurance Act provisions. A warranty provider may be a licensed insurer authorized to undertake home-warranty insurance or a person or class authorized by regulation.
The Lieutenant Governor in Council may prescribe mandatory policy conditions, minimum coverage limits, coverage periods, exclusions, waivers, limitations, definitions and prohibited terms. Warranty providers therefore face obligations that may be specified later in regulations rather than exhaustively in the statute.
Different commencement dates
Most of the Act takes effect by proclamation, allowing the government to bring the operational reforms into force when supporting regulations and administrative systems are ready. Sections 3 and 5, dealing principally with licence terms and related regulation-making authority, come into force on January 1, 2016.
This staggered structure matters for implementation planning. Insurers must distinguish provisions with a fixed commencement date from provisions whose obligations depend on proclamation and, in several areas, further regulations or supervisory procedures.
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Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Alberta auto-insurance consumers may benefit from stronger oversight of both mandatory and supplemental pricing, including a regulatory ceiling for basic coverage and a clearer basis for challenging how premiums are calculated.
- The Automobile Insurance Rate Board gains a defined role in approving rating programs for additional coverage as well as basic coverage, giving it a broader tool for examining insurer pricing methodologies.
- The Minister and Superintendent gain better access to insurer information and more direct tools for supervising market conduct, pricing implementation and policy analysis.
- New-home buyers may benefit from more detailed mandatory standards for home-warranty contracts if regulations establish meaningful coverage limits, required conditions and restrictions on exclusions.
- Alberta-based reciprocal insurance exchanges and their policyholders may benefit from clearer investment and guarantee-fund requirements that align the exchanges more closely with other regulated insurers.
Who Bears the Cost
- Automobile insurers must prepare, submit and maintain rating programs and supporting data for both basic and additional coverage, while adapting systems to Board approvals, maximum premiums and Superintendent procedures.
- Reciprocal insurance exchanges with Alberta principal offices may face higher capital-allocation constraints because their investments must follow provincial-company rules and their guarantee funds must incorporate a revised formula.
- The Automobile Insurance Rate Board and the Superintendent will need additional review, data-management and enforcement capacity as the pricing framework expands beyond basic coverage.
- Insurance departments and compliance teams must monitor regulations, Board decisions and written procedures because the Act leaves important pricing, reporting and home-warranty details to subordinate instruments.
- Warranty providers and persons authorized by regulation to issue home-warranty coverage may face new mandatory policy terms, minimum limits and restrictions on exclusions or waivers.
Key Issues
The Core Tension
Bill 39 seeks tighter control over insurance pricing and contract standards while preserving enough flexibility for regulators to respond to changing markets. The same delegation that allows quick intervention—government-set premiums, Board-approved rating programs and Superintendent procedures—can also make compliance less predictable and make it harder for insurers and consumers to see, contest or anticipate the rules that determine what coverage costs.
The bill’s consumer-protection effect depends heavily on instruments that are not included in the Act itself. The government can set maximum premiums, determine premiums for either coverage category, prescribe submission and confidentiality rules, and authorize the Superintendent’s procedures.
That flexibility can help regulators respond to market conditions, but it also makes the practical burden on insurers—and the transparency available to consumers—dependent on later rules and administrative decisions.
The treatment of additional coverage creates a particularly important trade-off. Bringing collision and other supplemental products into an approval framework may give regulators more leverage over pricing and methodology, but repealing the former filing and actuarial-review provisions removes a familiar statutory process.
The bill does not specify how quickly the Board must act, what evidentiary standard governs approval, or how insurers can challenge a decision. Those omissions could affect product availability, rate-change timing and regulatory predictability.
The bill also combines consumer-facing reforms with solvency, governance and technical amendments. The revised reciprocal-exchange formula and investment rules may strengthen financial safeguards, but they can restrict how smaller or specialized exchanges manage funds.
Similarly, deleting the section 612 complaint-resolution framework may reduce duplication if another process exists elsewhere, but the bill itself does not identify a substitute for policyholders disputing premiums, availability or insurer fault determinations.
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