Canadian Underwriter

The potential downside for brokers of ICBC’s new care-based model

February 10, 2020   by Jason Contant

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The government of British Columbia’s recent announcement that it will be removing lawyers and legal costs from the system to reduce insurance premiums by about 20% and increase care benefits has been met with approval from the provincial brokers association.

However, there is a downside to the plan to reduce premiums so drastically by May 1, 2021, if legislation passes as planned this spring.

“Let’s face it: if premiums are going to drop that dramatically, broker incomes are going to drop as well and that’s something we will be keenly interested in,” Insurance Brokers Association of B.C. (IBABC) executive director and chief operating officer Chuck Byrne told Canadian Underwriter in an interview Friday. “We have a significant amount of time to get up to speed and think through that, and that’s certainly going to be the focus of our meeting with our members in the next few weeks.”

Byrne was asked by Canadian Underwriter about how the provincial government’s briefing is progressing and if there were any sticking points.

IBABC said in an announcement Thursday (when the provincial government revealed its new Enhanced Care model) that the association and senior management are being briefed on the details of the announcement and Insurance Corporation of British Columbia’s (ICBC) plans with the change. “I think brokers are genuinely interested in knowing how this will affect their workflow and what training and support is required,” Byrne said.

Under the government’s plan, legislation will be introduced in the spring 2020 session, with regulations to follow in fall 2020. If passed, the reforms would take effect May 1, 2021. Among the changes:

  • Removing lawyers and legal costs from the system to reduce rates by about 20%, or $400 in savings per driver. In most cases, you won’t be able to sue an at-fault driver. There will still be the ability to sue those who are convicted of certain Criminal Code offences, such as impaired driving, for additional compensation. People will also have the ability to sue certain other non-motorist parties (such as a pub owner or vehicle manufacturer) for certain damages if actions contributed to injuries sustained in a crash.
  • Increasing care benefits for anyone injured in a crash to at least $7.5 million as a potential catastrophic lifetime limit (24 times higher than today)
  • A 0% basic rate change, effective Apr. 1
  • Customers with complaints or disputes about their claim, benefit payments or fairness issues will have recourse through the Civil Resolution Tribunal, the B.C. ombudsperson or an upcoming ICBC fairness officer
  • An estimated removal of $1.5 billion in costs in the first full year, savings that will be passed on to ICBC customers through lowered insurance rates
  • Maximum wage loss coverage of $1,200 per week, up from $740 currently. “The decision around that was to represent a 90 percentile of income levels for the majority of British Columbians, which is a pretty high watermark,” Byrne said.

Perhaps one of the most interesting aspects of the announcement is “removing lawyers and legal costs” from the system. Can this be done?

“Actually, you do legislatively remove the ability to involve a lawyer and that’s precisely what this does,” Byrne said. “Clearly it eliminates an estimated amount of $1.5 billion in today’s costs for legal and court [costs].”

The Trial Lawyers Association of BC said in a release Thursday that this move is a “deliberate taking way of the right of British Columbians to receive fair access to courts and fair settlement for those injured on our roads.”

Byrne said B.C. Premier John Horgan has publicly stated that the government expects with “100% certainty” a court challenge from trial lawyers.

“There will be a challenge, but based on the work they have done to develop this in context of what exists in Saskatchewan, Manitoba, Quebec, I’m pretty sure they’ll have the legislation correctly written so that it may be challenged all they want, but probably not overturned,” Byrne said. “You can rest assured that areas of Canada with experience have been greatly consulted.”

IBABC said in its announcement that Enhanced Care coverage will have “tremendous benefits for consumers as it puts the focus on helping crash victims get back to health with having to go through the court system and on helping bring premiums to an affordable level for British Columbians.

“This was a bold move for sure,” Byrne said, calling it one of the biggest Canadian insurance announcements in decades.

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10 Comments » for The potential downside for brokers of ICBC’s new care-based model
  1. Larson says:

    Most policy holders have no idea just how much of their annual premiums went towards lawyers – a BILLION DOLLARS ANNUALLY! That’s shocking. Private companies like Intact who cherry pick the risks here are going to be the biggest losers here. They should cut their losses and leave asap because there’s very little incentive left for clients or brokers to refer to them.

    • Timmy says:

      Except the billion dollar figure is a propaganda number put out by the NDP government to smear lawyers, who are the ‘whipping boy’ for this move.

      I’m sure the girl with a broken back will enjoy begging ICBC for her treatment expenses for the rest of her life when she is hit by some a**hole distracted by their phone while driving. No money for her pain, no money for her lost career.

  2. Suzana Matkovic says:

    “ICBC” has shown how much they care. It doesn’t take months to approve medical treatments as has been the case with my mva claim.

    As for lawyers, people wouldnt be hiring them and exercising their legal rights if ICBC was doing their job. Tell me one insurance company that wants to pay someone out for injuries?

    As for what trial lawyers earn…..they deserve every penny they get just as much as anyone else that works for a living.

    Punishing injured parties by taking away their rights to sue, is not a government that cares.

    The European system works way better….you cause an accident, the other parties insurance company pays. No bs trying to get the care you need. Nothing will be better under this new “no fault” system. ICBC will still play the piper deciding what they will cover and what they won’t.

    For anyone that comments here negatively about lawyers….god forbid you ever get involved in a mva and have to deal with ICBC…you will learn the hard way that ICBC just doesn’t give a crap.

    As trial lawyers have indicated,
    it will be a meat chart at the expense of injured people.

  3. Filip says:

    Very strong move by BC.

  4. Glenn says:

    This change has been a long time coming. Lawyers have priced themselves out of work, they have no one to blame but themselves. I think ICBC is on the right track, no fault is better than the tort system; which is not working in any province, not just BC.

  5. Bill Forbes says:

    I find it quite disgusting that ICBC’ s biggest concern is that brokers income will drop ! What ever happened to customers come first ? We as an industry should always be placing customers interests first .

  6. Dan says:

    I’m hoping that the reduced premiums will be replaced with more new policies being written. People who have hesitated to insure “the fun stuff” due to cost, or were risking use of their toys while uninsured may come back to start purchasing coverage again. Also, people may choose to insure their personal property with higher limits as they aren’t being squeezed so tight with their vehicles. I’m excited to tell people about how much they’re saving again, rather than giving yet another speal about years of rate increases.

  7. Eric says:

    I don’t have any affinity towards lawyers. A necessary “evil” to accessing our legal system as far as I’m concerned. But everyone is going to regret having a system where an individual loses the right to have his/her say in court and hope ICBC/government treats you fairly. Good luck to everyone.

  8. Robby says:

    This ICBC postures and lies of reality.

    Only a quarter goes to the lawyers of that 1.5 billion. The rest goes to the injured people. Lawyers pay there office expenses, staff with their earnings. An average injury lawyer makes little more than a nurse.

    Worksafe model is what they propose.

    A total failure for the rights of BC residents where there is no option.

    Talk to your MLA, other people.

    Do not let this pass.

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