November 25, 2002 by Canadian Underwriter
The Liberal B.C. government announced that it has temporarily opted against open competition in the province’s basic, mandatory auto insurance market.
The provincial government delivered its long-awaited “Core Review” findings in investigating the operation of crown insurer, the Insurance Corp. of British Columbia (ICBC), with the view of deregulating the insurance market as part of a broader privatization drive. “Our new era commitment was clear: to keep [insurance] rates low, and to increase competition [in the insurance market] in a way that would further that objective. Given current conditions in the Canadian auto insurance industry, a move to full competition on basic insurance is not an option at this time,” the government’s finance minister Gary Collins says.
In a statement, the ICBC’s president Nick Geer comments, “given the current state of the auto insurance industry and financial markets, this is the time for an evolution, not a revolution”. The government also approved increased ICBC rates which kick into effect from the beginning of next year. Rates combining personal and commercial auto coverages will rise by 4.8% on average. Commercial rates will increase by 11.9% on average, with mandatory personal premiums climbing by 1.4%. Optional insurance personal insurance rates will rise by 7.6%. ICBC says it will continue its practice of not setting rate adjustments according to the age of drivers.
The Insurance Bureau of Canada (IBC) reacted strongly to the B.C. government’s decision, noting that, “[this] announcement means that the Campbell government has essentially slammed the brakes on [insurance] competition and choice in the province” The IBC also took exception to the government’s announcement that it plans to appoint a separate regulator to oversee ICBC. A IBC statement notes that insurers operating in B.C. are subject to regulation under the province’s superintendent of insurance, Alan Clark. “The appointment of a special regulator [is] nothing more than one government entity being created for the sole purpose of regulating an existing government entity. There is no efficiency, only another layer of government that will end up costing taxpayers more in the long-term.”
The IBC notes that the Liberal party had used deregulating the province’s auto insurance market as a pledge in last year’s provincial election. “Private insurance companies believed they had been working with a government committed to providing consumers with choice – a choice they believed a Campbell government would provide when the B.C. Liberals were elected,” comments IBC president Stan Griffin.