October 11, 2001 by Canadian Underwriter
A new study released by the Canadian Center for Policy Alternatives (CCPA) suggests privatizing British Columbia’s auto insurance system will be bad for consumers.
“Allowing private firms to compete with ICBC in the provision of basic auto insurance will almost certainly result in a number of negative outcomes, including discriminatory rate setting, higher insurance premiums for hundreds of thousands of British Columbians, job loss, diminished investment in road safety and higher costs for the public treasury,” the CCPA writes in its report, “The Road Ahead”.
The study points to numbers from the Consumers’ Association of Canada in B.C. suggesting drivers would face higher rates under privatized auto, as well as comments by the Automotive Retailers Association estimating 500 body shops would be out of business under full competition.
The CCPA also suggests that the new Liberal government could find new costs landing on its doorstep, including medical and road safety expenditures.
The Insurance Bureau of Canada (IBC) has come out strongly against the report, saying it is full of factual mistakes and calling it “an ideological hatchet job”. Specifically IBC argues that private insurers do contribute to health care costs and that older and rural drivers would not face higher rates in a fully competitive system.