B.C. projects big savings from new minor injury cap

The Insurance Bureau of Canada (IBC) is congratulating British Columbia’s proposed legislative changes that would introduce a minor injury cap of $5,500 in the province, a move aimed at reversing the public auto insurer’s skyrocketing legal and administrative costs.

The B.C. legislation would introduce a limit of $5,500 on pain and suffering payouts for minor injury claims. The cap on general damages awards for those suffering minor injuries that result from auto accidents would come into effect on Apr. 1, 2019, if the legislation is approved.

The Insurance Corporation of British Columbia (ICBC) says the amendments, net of increased accident benefits and implementation costs, are estimated to reduce claims costs by more than $1 billion annually. A statement from the government of B.C. said that a limit on pain and suffering damages for minor injuries “will allow ICBC to redirect resources to increasing benefits for lost pay and medical rehabilitation for all people injured in accidents.”

But that doesn’t mean the government’s auto insurance monopoly is in the clear. “ICBC is projecting rate increases similar to what we’ve seen in recent years, even with this minor injury cap,” Aaron Sutherland, IBC’s vice president of the Pacific region, said in an interview Tuesday with Canadian Underwriter. Last year, he said, ICBC revealed costs for the average driver would go up by 8% this year.

Sutherland reported that Alberta has a minor injury cap of $5,000, while some of the Atlantic provinces have a cap of about $7,500. “Here in B.C., they have struck a sort of middle-of-the road cap.”

Other proposed changes include:

• The foundation for the new legal definition of what constitutes a “minor injury” in B.C., including abrasions, contusions, lacerations, sprains and strains, pain syndrome, psychological and psychiatric conditions, or an injury in a prescribed class of injury, even if chronic. This will be further defined in regulation over the coming months.
• The simplification of dispute resolution processes for cases under $50,000, allowing them to be resolved in as little as 90 days (currently these disputes can last two to three years in B.C. Supreme Court).
• A doubling of the overall medical care and recovery cost allowance to $300,000. This change will be made retroactive to Jan. 1, 2018.
• Benefits payable for services provided by healthcare practitioners will be established by regulation. To ensure the fee amounts are current and fair, they must be reviewed every five years.

Although ICBC has ruled it out, opening up the public insurer’s monopoly over basic rates to private competition must be part of a long-term solution, Sutherland said. He added there have been eight government reviews of ICBC in the last five years.

“Recent research has shown that drivers could save up to $325 annually on insurance if they were able to shop around here in B.C., as they can in most other Canadian provinces,” he said. “That’s what’s missing from the conversation today about the work that’s being done to fix B.C.’s auto insurance system.”

Opening the system up to competition “gives ICBC an incentive every single day to re-evaluate what it is doing, look at its processes as critically as possible, and course correct where needed to best meet their customer needs,” Sutherland said. “Until we give the customer the power to inform ICBC, or any insurer, whether or not they like the service they’re getting, we’re going to be really challenged in terms of delivering the best product at the best price.”