Canadian Underwriter

No push from brokers to end B.C. government monopoly on auto insurance

March 7, 2018   by Greg Meckbach, Associate Editor

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Despite the fact that British Columbia’s government monopoly auto insurer lost almost $1 billion in the first nine months of last year alone, brokers in the province are not seeing a push from motorists to open the market to competition.

“Nobody [in B.C.] is particularly convinced that increased competition or even privatization or an open market would change things much,” Chuck Byrne, executive director of the Insurance Brokers Association of B.C., said Tuesday in an interview with Canadian Underwriter.

Insurance Corporation of B.C. (ICBC) has had a monopoly on mandatory auto insurance in the province for more than 40 years. The crown corporation lost $935 million during the first nine months of 2017 year and reported net losses of $280 million in 2016 and $257 million in 2015. B.C. motorists can buy optional additional insurance, above and beyond what is mandated by law, from either ICBC or from private-market carriers.

Insurance Bureau of Canada has called on the B.C. government to let private-sector insurers compete with ICBC on the basic product. But brokers are not hearing the same from their customers, Byrne reported Tuesday.

“The reality is that no one believes there is a better system out there,” Byrne noted, adding the Ontario auto market is in “turmoil” and insurers there are calling for reform. Auto insurers nation-wide are facing increasing claims costs from vehicle damage and personal injury.

The “axiom” for auto insurance in B.C. is that “the perfume of the premium outweighs the stench of the risk,” Byrne said. “Everyone would like a shot at the billions of dollars of auto insurance here, but I can tell you that the auto insurers in B.C. are losing their shirts.”

Byrne described himself as a “free enterpriser,” but he said “auto insurance is a social problem, and B.C. has got the right elements to bring [the auto insurance system] back to the way it should be.”

Neither the B.C. Utilities Commission (which regulates rates) nor the politicians have been open to raising premiums across the board.

But the government announced Monday it is seeking public feedback on possible changes to rating factors. One proposed change would give ICBC customers a 10% discount if they have vehicles with automatic emergency braking installed by the original equipment manufacturers. Another possible change is to charge drivers higher premiums if they caused accidents while driving someone else’s car.

The government is also proposing to raise penalties on insurance for some traffic convictions.

“There has got to be a greater tie-in to cause and effect with driving behaviour, and that is where the insurance rating structure will need to take on a change,” Byrne said.

Monday’s announcement about possible changes to ratings factors comes nearly a month after Attorney General David Eby announced the province will impose a $5,500 limit on pain and suffering awards for minor injury claims. The B.C. government is “making some bold moves,” Byrne said. “The right moves, we think.”

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11 Comments » for No push from brokers to end B.C. government monopoly on auto insurance
  1. Patrick Treacy says:

    Lets be honest here, the insurance brokers in British Columbia do not want an open market in auto insurance because they have a vested financial interest in keeping the status quo.

    An ICBC license is selling for $1.5 million to $2 million and IF free market auto insurance came into effect, these licenses would be worth nothing !!! The insurance brokers with ICBC licenses would therefore financial loss $1.5m to $2m for each license that they hold.

    No public interest by them on this issue, just financial interest !!!

    Everyone I know would be quite happy to allow a free auto insurance market here in British Columbia as ICBC is over-staffed, over-paid and definitely not independent from government interference. It is dysfunctional.

    The British Columbia government are also implicit in this, as no new ICBC licenses have been issued in years therefore creating the explosion in the value of ICBC licenses.

  2. BC Broker says:

    Patrick knows what he is talking about

    • Jay says:

      Can’t agree more with pretty much every comment above. ICBC is a joke and dysfunctional. You know you’re doing a shetty job when you have almost every client complain about you….

  3. Xiao Zou says:

    I agree with Patrick Treacy.

  4. Larry says:

    Can Patrick make it more obvious he is obviously working for the IBC? LOL! And yeah Im a broker, 20 yrs now and yeah the current system is a decent compromise.

  5. Navid says:

    Who is broker to decide? It is car owners who pays for the car insurance and they should have the option to buy their insurance from whomever they want to buy it from. I moved to Canada last year from Europe and ICBC monopoly is by far one of the biggest jokes I’ve ever heard. When you want to buy a car insurance they ask you: will you use your car for pleasure or for driving to work? And if you drive to work and park your car for 8 hours there you need to pay more than if you drive hours daily for the so called “pleasure”. What difference does it make for what I use my car? If I would work using my car like a TAXI they could charge me more, but the fact that driving to work is more expensive than using your car for pleasure is a mere joke. Bunch of incompetent people in the government of B.C and the government of Canada. They should learn from Europeans. Europeans have not a fraction of Canada’s resources and they are doing a much better job than Canada is doing (in every aspect and field). Shame on Canadian and BC governments.

  6. Kathryn says:

    GET RID OF THE ICBC MONOPOLY. Couldn’t agree more with the anti-ICBC comments presented above. Of course the current brokers don’t want to change the (illegal/anti-constitutional(?)) system. The clients/payers want an open-market, ethically and efficiently managed (completely opposite to the current management of ICBC.)
    Moving from Alberta and discovering the scam artists of ICBC it was a complete shock that I was not free to pick and choose an insurance agency to insure my vehicle. Our freedoms are in jeopardy, and guess who ends up paying for the $1 billion bail-out of a completely inept, incompetent run government make-work program, … the naive BC residents. We pay high insurance premiums, with no competitive choices, and then again in higher taxes to pay for the boondoggle called ICBC! Wake up sheeple!

    • Dan says:

      I thought by being a Canadian citizen I had the right to make my own decisions and choose who I want to get coverage/pay for a service from. But instead I am forced to buy into ICBC’s terms, rates and conditions. My only other option is….”well don’t drive in BC then”. How are they getting away with this?!?!?!

  7. Dan says:

    I am a 34 year old Male, I moved to BC 3 years ago from Ontario where we have private insurance companies. I had my financed truck and my girlfriend’s car both insured under my name. I was paying 135$ a month for both vehicles for full coverage. Now to insure my truck in BC I pay 357$ per month. I cannot go to any other insurance companies to get insured in British Columbia, because ICBC has a monopoly on insurance, which I thought was illegal in Canada?

  8. Dan says:

    Think people……..when insurance is privatized and you are involved in a motor vehicle accident and the other driver has coverage with a different insurance provider, they defend you as a driver/client. But in British Columbia when both parties are covered under ICBC who are they supporting??? How can they go to court against themselves as a plaintiff and a defendant?!

  9. John says:

    Bc insurance is a joke. As Dan said they are there to make money and not have to pay out any claims..if I’m not mistaken there was a police officer sitting in her car and she was hit by another vehicle. She was killed in this accident.bc insurance said she was at fault and denied a payout when a claim was put in for the car….ridiculous…fortunately after a public outcry they reversed their decision…I think this would make a great platform for a politician to use for running for the premier position in BC…working for the people that put you in power…not against them…

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