Auto insurers, province dispute whether B.C.’s Bill 11 limits competition

The Insurance Bureau of Canada (IBC) has published an open letter to British Columbia Premier John Horgan, outlining concerns that the province’s Bill 11 may “stifle the limited competition that currently exists in BC’s optional auto insurance market,” a claim that the B.C. government strenuously denies.

In particular, IBC in its letter highlights a new proposal for offering vehicle damage coverage when a driver is not responsible for an accident.

“As part of the move to a no-fault system, Bill 11 creates a new mandatory Basic Vehicle Damage coverage that is only available through the Insurance Corporation of British Columbia (ICBC),” IBC says in its letter. “This product will provide coverage for vehicle replacement and repair when a driver is not responsible for an accident.

“Today, these repairs can be covered by the third-party liability insurance of the driver responsible for an accident, which is open to choice and competition above ICBC’s basic limits.”

In B.C., the Insurance Corporation of British Columbia (ICBC) is a provincial Crown corporation that provides universal compulsory auto insurance (Basic insurance) to drivers in B.C.

Basic insurance rates in the province are regulated by the British Columbia Utilities Commission (BCUC). In addition to providing basic vehicle insurance, ICBC competes with private insurers on various optional vehicle insurance coverages, including extended third-party liability, collision, comprehensive and vehicle storage.

IBC contends that Bill 11’s changes to how vehicle damage is covered “will reduce what little choice drivers have in B.C.’s optional auto insurance market,” says Aaron Sutherland, vice president of IBC’s Pacific region. “There is no rationale for this expansion of ICBC’s monopoly over vehicle damage insurance. A better, more affordable auto insurance system would allow drivers to purchase this coverage from any insurer they choose.”

Canadian Underwriter asked ICBC for more information about the Basic Vehicle Damage coverage. ICBC deferred to the B.C. Ministry of Attorney General for comment about IBC’s letter. The B.C. Attorney General’s office supplied a transcript of remarks that B.C. Attorney General David Eby made in a scrum with local reporters, one of whom asked Eby about the contents of IBC’s open letter.

Eby denied in the media scrum that Bill 11, the Attorney General Statues (Vehicle Insurance) Amendment Act, would further shrink the optional auto insurance market in the province. In doing so, he clearly linked private auto insurance to the strata insurance issue in the province, in which premiums for strata corporations have increased by as much as 30%.

“I appreciate [private insurers’] efforts to try to move car insurance towards a more strata model in the province,” Eby is quoted as saying in the transcript, in answer to a question about the province’s proposed move to a no-fault auto insurance model. “I’m not going to be pursuing that. But with respect, given what we’re seeing in the province right now, I wouldn’t legislate reforms around their excesses. But I do note that British Columbians have relief coming, and the 20% in May of next year will be shifted to a new insurance model, and private insurers will continue to compete there.”

Eby’s said private insurers in B.C. would continue to be able to participate in selling a variety of optional products, “including products that don’t exist right now, including a wage top-up product.” His remarks do not elaborate on the wage top-up product.

In the transcript, the reporter follows up with the following question in the transcript: “Is there [inaudible] reductions in the optional option that people have under a no fault? Again, do you have optional insurance changing under the [inaudible] model?”

Eby’s answer alludes to “new products” (without mentioning names) that would be offered by ICBC. Such offerings would be competitive with offerings of the private insurers in the optional market, he suggested.

“There will be changes on the optional side without question, including new products that optional insurers will be able to provide to British Columbians,” Eby is quoted as saying in the transcript. “So I’m not clear on why the Insurance Bureau of Canada feels that they won’t be able to participate. Just the opposite, that we do products that they will be able to offer British Columbians. But I can assure them that we are not moving to an Alberta or an Ontario model [of private insurance].”