Canadian Underwriter

Pressure builds to end auto insurance monopoly

May 28, 2019   by Adam Malik

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Calls to end a provincial stranglehold on auto insurance are growing as business groups, municipalities and the Insurance Bureau of Canada (IBC) have taken up the cause.

ICBC, on the other hand, is saying the high claims costs the public insurer is experiencing is not particular to any particular business model, private or public.

The British Columbia Chamber of Commerce made the most recent push for ending the Insurance Corporation of British Columbia’s (ICBC) monopoly on the market during its annual general meeting last week in Burnaby. The resolution was co-sponsored by the Richmond and Abbotsford chambers and supported by the Williams Lake, Port Hardy and Kelowna chambers.

IBC issued a statement supporting the provincial group in its call, saying residents deserve the ability to choose when it comes to auto insurance.

“Under ICBC’s monopoly, drivers in BC pay more for auto insurance than anyone else in Canada,” said Aaron Sutherland, IBC’s Pacific vice president.

Drivers in B.C. face the highest average annual premium rates in Canada, averaging $1,680 in 2017, according to data from ICBC and the General Insurance Statistical Agency, as cited by IBC. And that number is set to rise. The corporation expects prices will go up another 25% over the next three years. ICBC raised the basic rate 6.3 on Apr. 1.

At a recent council meeting, the District of Sicamous, a resort town east of Kamloops, passed a resolution to have the Union of B.C. Municipalities, a group that allows smaller communities to collectively voice concerns, work with the province to open up auto insurance competition and lower premiums. The council cited these stats when passing its resolution, while also highlighting that two other provinces with government-owned insurance were paying far less on average – Saskatchewan at $936 and Manitoba at $1,080.

B.C. drivers would save upwards of $325 each year, according to Sutherland. “Competition provides a powerful incentive for any company to deliver the best product at the best price. Auto insurance is no exception to this rule.”

But there are also concerns over opening up the market. In a statement to Canadian Underwriter, Troy Wotherspoon, Insurance Brokers Association of B.C. (IBABC) president, said his group hasn’t seen an option put on the table that is as consumer-friendly as the current ICBC model. Public insurance is available to all British Columbians, he said, but the same can’t be said if private insurers move into the province.

“Furthermore, having mandatory insurance requirements only works when integrating policing with a public system – this has virtually eliminated the number of uninsured drivers on the road and reduced the high costs of uninsured motorist protection,” Wotherspooon added.

As for the ICBC, it acknowledges that there are concerns. But opening up the market won’t be the panacea people are looking for, the corporation said.

“Whether we have a public or private auto insurance system, the same underlying problems of a high number of crashes and claims, and record high claims costs, would still need to be addressed – simply making a change to private insurance would not solve these issues,” ICBC told Canadian Underwriter in an email Tuesday. Ontario and Alberta have also been highlighted by IBC as having “broken” auto insurance systems, featuring high rate increases, the spokesperson added.

“Many reviews of ICBC have come to the same conclusion – the biggest problem is the system in which ICBC operates, and not ICBC itself. That’s why we’re currently undergoing the biggest overhaul in our history, doubling benefits, making rates fairer and reducing the burden of excessive legal costs.”

The IBABC reiterated its support for the corporation.

“ICBC is moving in the right direction with its current reforms and these changes will vastly improve the current model,” Wotherspoon said. “Drivers will now be more accountable for their driving behaviour and the financial burden will shift from good drivers to bad drivers.”

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12 Comments » for Pressure builds to end auto insurance monopoly
  1. Michael says:

    Remarkable. In Ontario, the private insurers and the Insurance Bureau of Canada have been claiming that for years, they lose money on auto insurance. Yet they are clamoring to take over BC’s auto insurance. So they can lose more money? Something doesn’t add up.

  2. Glennis says:

    Watch what you wish for. I have worked for both private insurance and ICBC. I have lived in BC and Ontario. My two children could not afford insurance in Ontario due to the cost of private insurance. Private insurance for new drivers starts at a surcharge. Private insurance doesn’t start reducing rates until you have ten years accident free. Private insurance provides less coverage under their auto policy, hence the lower rates. Private insurance has continually reduced Accident Benefit coverage to keep rates in check. ICBC has increased coverage under Accident Benefits. ICBC was brought in for a reason, the reason still exists. Private insurance is in as much financial trouble as ICBC. The IBC has always been biased against Government Insurance and has a hidden agenda to get rid of it.

    • PJ says:

      Well said… I too have worked at both areas of insurance including AB. I found my insurance to be cheaper in BC than the other provinces. More importantly, I’ve seen private insurers look for reasons to deny claims. ICBC do the right thing and get it right most of the time.

      Private insurers pay IBC a chunk of change to lobby on their behalf… other than that they do very little to benefit the industry. The industry thinks so too. Look to Aviva who no longer support IBC. Maybe it’s time for private insurers to look elsewhere for a lobby group

    • Bill Cryderman says:

      There is an additional consideration often overlooked and that is the millions of CPC’s issued each year. The average consumer knows little about this bonus override offered to each broker for discriminating against some consumers and forcing them into higher rates on perception and greed.
      Brokers are rewarded for this type of selection by not giving the consumer the best deal they can.The bonus is paid every year to each broker that constantly meets the insurers goal of certain classes of business and all insurers provide this incentive!

  3. Frank Talk says:

    ICBC works very well for residents of BC and the last thing that province needs is the degree of chaos residents of Ontario have had to put up with through private insurers since 1990. Benefits have been reduced and access to these reduced benefits has been increasingly restricted through regulatory changes demanded by private insurers every five years. Even with most bodily injury claims eliminated through thresholds and indexed deductibles, and no-fault benefits pared to the bone, its still not enough for P&C insurers in Ontario, and they continue to blame their customers of committing fraud as the reason for their allegedly poor results.

  4. Patrick Treacy says:

    The comments from the IBABC should be taken with a pinch of salt !!!

    Their interest is not to protect the consumer, it is solely to protect the interests of the corporate insurance brokers … in this case, the value of the licenses from ICBC which are now estimated to be in excess of $1,000,000 each.

    No wonder they and the members of the IBABC want to keep the status quo !!!

    • Sam Cowan says:

      Although the value of an autoplan license is that high, most brokers don’t use the sale value in the formula to value their business. All provinces without a government ran auto system are in dire straights.

      Don’t forget the pinch of salt when mentioning the IBC, which is a lobby group funded and management by the general insurance industry (the same group that wants a piece of BC auto pie).

  5. Peter Hope says:

    These are great comments – its nice to see well informed individuals! IBC and its staff are paid by private insurers to lobby for the interests of private insurers – the is zero interest in putting the public first. The problem in BC is unique due to the urban areas of Vancouver being riddled with fraud, money laundering, high priced cars and inexperienced drivers which skew the claims numbers. ICBC could solve A LOT of its problems by introducing telematics and greater licensing standards – which should be mandatory when considering the problems they are having and that roads are public places. Some people (but not all people) take advantage if they know there is no one watching. And if government makes auto insurance mandatory, then it should be provided by a public entity because its more akin to being a service that drivers need, rather than a product that drivers want.

  6. Bob says:

    Amazing how the provinces with the most people crammed together and highest lawyers per capita have the hardest time making auto insurance affordable. Private or public, it’s a grim task to take on in my view.

  7. Anonymous says:

    I’ve worked for both ICBC and for Private. The public is ignorant on what goes on behind closed doors with private for-profit insurers. Right this moment the insurer I worked for deliberately spiked their rates in order to shed thousands of insureds from it’s books. The standing order is “do NOT even try to retain the business – if they threaten to walk please show them the door because that’s what we actually want.” You might be thinking that these are claims conscious clients they want to lose – you’d be absolutely wrong. They simply reside within certain postal codes and have a lower credit score. This company is only there to sign you up during a soft market but they will ditch you during a hard market. The above story talks about a “monopoly” yet who is this private insurer you’re with and how many companies has it acquired? It hides behind numerous names yet it’s one company! Do your homework. Please understand that it was we the people that chased away private insurance companies from BC and for a damn good reason. Let’s not repeat our mistakes from the past.

  8. TBA says:

    Hello All, IBABC has their own interest at heart and always have in BC and have screwed Brokers for decades, HOWEVER, they are correct in stating their WILL BE NO “PRIVATE INSURER” to step up to the plate to take on the Task.

    When this conversation comes up, BC is always compared to Prairie Provinces, and that is comparing Apples to Oranges. The terrain the BC is 2nd to none, and that adds to pricing. HOWEVER, no one made to comments on what brought ICBC to the situation it is currently in. NOTE: The BC Liberals (not the same as Federal Liberals), for the last 15 Years have been cyphoning funds from ICBC to balance their budget. When ICBC started, it was a non profit organization and the Liberals made it into a Profit Organization. This is the reality, plus people having the mentality of making quick bucks of the backs of other premium payers (other than seriously injured people).

    When commenting on these articles, please lay out all factual information and NOT just one side or the other.

    In the end ICBC, for BC, is the only option for basic coverage. BC already has Private options for own damage coverage, and the Private Insurers that offer the physical damage coverage are “creamers”, meaning they only take the best of the best and nothing less.

  9. Jonathon Shipton says:

    Want to end ICBC monopoly challenge them not only on rates but refusal to separate registration and insurance
    Every year independent truckers lose truck because the ICBC forces them to sign over ownership title to use prorate insurance and refuses to let them buy out of province so this means that for any reason a company can withhold sell or anything they want with a truck they did not buy and even charge the trucker with theft and fraud for using it . Use this as well and ICBC monopoly with be gone as this is constitutionally against independent truckers and don’t know why they have not challenged ICBC before except that once a trucker files suit ic bc settles with gag order

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