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The story behind ICBC’s bold change to auto insurance


February 12, 2020   by Jason Contant


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Why did the Insurance Corporation of B.C. (ICBC) decide to move towards a no-fault style model for auto insurance?

“I heard rumours for months that they were going to introduce a no-fault product,” consultant Willie Handler, principal at Willie Handler and Associates, told Canadian Underwriter in an interview Monday. “The reforms they introduced last year were not bringing down costs enough. On several occasions, ICBC and government representatives said, ‘If this doesn’t work, we’re going to have to try another model,’ and that model was no-fault.”

On Feb. 6, the provincial government announced its Enhanced Care model, which would remove lawyers and legal costs from the system to reduce rates by about 20%, or $400 per driver. In most cases, parties won’t be able to sue an at-fault driver. There will still be the ability to sue those convicted of certain Criminal Code offences, such as impaired driving, for additional compensation. People will also have the ability to sue some non-motorist parties, such as a pub owner or vehicle manufacturer), in certain circumstances.

Chuck Byrne, executive director and chief operating officer of the Insurance Brokers Association of B.C. (IBABC), agreed that the reforms ICBC introduced last year were not bringing down costs as quickly as hoped. Among the introduced changes was a minor injury cap of $5,500 for pain and suffering, an increase in accident benefits to $300,000, and the availability of the Civil Resolution Tribunal to deal with less complex claims.

Related: The potential downside for brokers of ICBC’s new care-based model

“Those were all well-founded and thought-through and intended to bring stability in B.C., but they and other factors just aren’t going far enough fast enough,” Byrne said Friday. He added that the minor injury cap and accident benefits limit will dissolve in May 2021 in favour of a $7.5 million catastrophic lifetime limit (which may even increase) if legislation passes in the spring.

Handler compares the new B.C. care-based model to that of Manitoba and Quebec. “What they’ve done is expanded care benefits considerably, but not to the same extent as Quebec and Manitoba, who have unlimited benefits.”

The B.C. government estimated that removing lawyers and legal costs from the system will save $1.5 billion. Is that possible? Without actuarial data, it would be difficult to say, Handler said. “However, when you look at comparable systems in other provinces, it’s probably realistic to say the costs are going to fall sufficiently to offer higher benefits and reduce premiums,” he said. “I think it’s feasible. Where they will land, it’s impossible to know.”

Related: What brokers and trial lawyers think about ICBC’s new care-based model

How about removing lawyers and (mostly) the right to sue? Handler noted that people deal with Manitoba Public Insurance and Quebec’s Crown corporation Société de l’assurance automobile du Quebec (SAAQ) without lawyer, so it is possible.

“ICBC tried to move in that direction in the past year when they expanded their ABs,” Handler said. “I think their experience was, ‘It’s not working because as long as people have a tort case as well, they’re going to have a lawyer. That is the weakness of the Ontario system. As long as you have the ability to sue, people are going to hire lawyers and the lawyers are going to say, ‘I’ll help with your AB claim.’”

B.C. is looking to introduce their new system by May of next year, which Handler calls a “very ambitious timeframe.” Then again, they already have an insurer set up and adjusters doing AB claims, so the transition is going to be easier than in other jurisdictions.

Handler said he was surprised with how the government of B.C. created the monopoly. “I could never figure out why the government of British Columbia created a government-run insurance system to administer a tort-based product. It never made any sense. The only reason you would introduce government-run insurance is because you want to go into no-fault.”


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18 Comments » for The story behind ICBC’s bold change to auto insurance
  1. Timmy says:

    The key phrase is ‘up to’ 7.5 million, and as this article says, why stop there? you might as well make it unlimited because ICBC will still exist to minimize your claim so they can !save money!

    If you want to see the true results of no fault just type in “Manitoba Public Insurance Reviews” into google to read the horror show that is a so-called ‘unlimited care system’ with no access to the courts.

    this quote from one review says it all:

    “Experiencing severe whiplash after MVA. Medical practitioners rate it a 3. Despite 5 assessments and documentation, MPI rates it a 1. So I’m not getting the care I need. Daily headaches. Weekly migraines. Torn ligaments in shoulders and neck and back. No medical history of any of this before MVA. Super athletic, ADHD person before MVA. What can I do to get proper medical care? MPI insists on a Multidisciplinary Assessment. Even with migraines and chest pain. If I don’t go, physio, chiro, etc. are stopped. I was self-employed in a delivery business, lifting 25 to 50-pound items. At the rehab clinic, the PT guy let slip that I am to be rehabbed at minimum wage. He had me carry a 5-pound weight for 1 minute, then said that I could easily go back to work. I asked him if he knew what my job was. “No,” I told him how much I lift and he was very surprised. “That’s interesting. MPI’s determined position for you is different.” How can MPI pretend my 28-year job is nothing?…”

  2. Naresh says:

    The union party took the easy Road. It is always more travelled. It’s time the NDP some serious decisions? We must stop protecting union jobs. ICBC And start laying off staff. Starting at the top This is just a cop out. We can also. Eliminate 50% of the commission that the Brokers earn did, you know 20% of your premium goes to a broker that is ridiculous travel agents make less than 3% 20% in this day and age they are protecting the wrong people. Also be a cap on the medical cost. The doctors can bill for I hear the doctors and Specialists for making $10,000 a report for ICBC ICBC. Bitter End. Or it will be the end of This Too Faced government.

    • Linda says:

      I’m a Broker for 30 years. Come sit in my chair for a day and tell me what a waste of space I am! You have no clue the education that is needed and the cost to become a Broker. The crap I have to take from the pubic every time someone sits in front of me. Why don’t you do your research and find out how much ICBC pays its Lawyers to “defend” it. Billions!!!!!! I pay for insurance and I’ve been the victim of a driver who didn’t know the rules of the road. Six major orthopedic surgeries and four years of recovery. The accident DID NOT HAVE TO HAPPEN!!!!! It wasn’t an accident it was negligence!!!!

  3. Dan says:

    The problem with the poster mentioning bad reviews for Manitoba’s system is simple- google reviews for ANY insurance company in the world, and you will find horror stories.

    You don’t need to google anything to know how expensive BC Auto Insurance is.

    • Timmy says:

      That’s right, every insurance company in the world is terrible. What the NDP wants to do is remove your ability to take your case to court and get fairness from a judge when you are treated terribly.

      This change removes every measure of accountability from ICBC. You are losing your rights.

      And ICBC would be profitable and have low rates if the government didn’t use it as a piggy bank. Look it up, what other insurance company in the world has to fund licensing offices and road conditions?

      You really think your rates will go down when the government wants to use it as an additional tax source? You will pay the same or more, and get much less value for your money.

      • Michael says:

        The cost of our system is way to high and the only winners are the lawyers.
        If it is true and they pay out 1.5 billion to lawyers that will be eliminated, then that seems like a no brainer.
        I know people who have got 6 figure settlements and the lawyer takes their “expenses” off the top and then takes a third of what’s left. It’s a joke!

        Hope the NDP follows through.

        • Timmy says:

          1.5billion was paid to injured people after a judge looked at the evidence of what they lost by being injured. ICBC never paid that to the lawyers, injured people paid their lawyers a portion after they got a judgment in the courts.

          So if ICBC is saving 1.5billion its because they don’t have to pay people what they actually lost, which is what they have been trying to do to injured people all along.

          That’s what the NDP is taking away, they want ICBC to be the judge jury and executioner of how everyone’s injuries impact their lives, with no access to justice if you are treated unfairly!

          And of course rates won’t go down, or stay down once the NDP need ICBC as critical source of tax revenue while they are destroying the province’s economy. They are already skimming over a billion dollars from the corporation’s finances to pay for licensing offices and other ‘general revenue’ expenses.

        • Linda says:

          How much has ICBC paid their Lawyers to “defend” them???? BILLIONS How about we just take their Lawyers out of the equation!!!!

        • Linda says:

          The only “winners” with No Fault Insurance will be ICBC . Trust me no one gets a 6 figure settlement for a hang nail. My Lawyers earned every penny they got. Without proper Legal representation I would have gotten a few nickels.
          I had 6 major surgeries and years of recovery. I would give back every dime I got if I could be who and what I was 5 mins before I got hit!! No amount of money “fixes” it.

      • Zachary Thompson says:

        Does the 20% decrease apply to young drivers as well? I ain’t paying 6 grand for basic coverage

  4. The Voice of the Citizen says:

    Here comes modern communism for all of you, “Dear Co-Citizens!! Long live the Regime!” I so badly hate Canadian, communist, legal system, that it’s only a matter of short time I get out of here for life and forget Canada ever existed on the face of the map.

  5. Mark says:

    The problem is that icbc treats people unfairly so that they need a lawyer. Why not force majority of these through the CRT to remove the lawyer cost but still give people a fair opportunity to seek compensation? The problem has always been icbc making their own rules for claims handling.

    Everyone in BC knows at least one person who was seeking a small amount of compensation, icbc refuses to be reasonable and they lawyer up and recover 10x that.

  6. sam says:

    For the last 50 years, in an accident, ICBC has been penalizing the owner of the at fault vehicle instead of the actual driver at fault.. Thus creating a couple of generations of Terrible BC drivers. The Terrible drivers have never had premium increase, thus making it Okay for Bad drivers to cause more accidents.. Stupid BC Leftists..

  7. Christie says:

    I am alarmed by this proposal. I do not trust ICBC to award the appropriate amount of money for people if they have been injured in car accidents. I think this is smoke and mirrors in that they are reducing the amount we pay but if we are hurt, it will be too late to get any compensation. Without lawyers, we have no recourse.

    I do not agree to this proposal. I think it is very bad for the drivers in BC.

  8. Tracy says:

    Death by 1000 cuts. The model in the 1970’s was created to address the rampant uninsured and underinsured motorists in the province. The need for universal coverage outweighed the need for the cheapest possible product. The model was solid but under attack from the outset. The accident benefits were generous for many years when they were set in 1973 but never increased, so over time the liability coverage had to absorb more and more of the cost of care. Even so, there were some years where the excess profits were returned to policy holders. I remember as a university student in the ’80’s receiving that timely cheque. But there was incredible pressure on the government from other insurers to get a piece of the auto insurance pie. In the ’90’s the optional coverages were opened to competition. The “risk of many shared to cover the losses of the few” took a hit. The best risk customers were not contributing to the pool. All underwriters know that is a problem in the long run if the goal is to have coverage for everyone. Then the government chose to merge ICBC with the government’s Motor Vehicle Licensing Branch. The operations and logistics of such a model was unprecedented and opened a channel for the government to skim ICBC’s profitable years into the general coffers. The excess years were no longer used to invest in rate stabilization (let alone rebates), but for political benefit ($1.2 billion – wouldn’t Intact/Aviva/State Farm be happy to hand over their profits to a provincial government?). Not to mention in 2008 when 3 Wall Street execs were “suddenly available” to come put their stamp on ICBC for a few years. And a tip of the hat to the incredibly creative plaintiff bar coming up with more and more labels for heads of damages for injured plaintiffs that impressed our courts (did you know one could be compensated because they were no longer able to pursue a career they had no interest or likelihood of ever doing (“loss of capacity”), or that judges even award for losses not proven (see Saadati), or millions despite no days off work, no repairs to a $600 bumper paint scratch, but dozens of witnesses paraded before a trial judge for weeks declaring the previously healthy, successful, ER doctor/real estate investor was never the same person due to “concussion” (see Wallman)? The changes of 2019 were promising but the plaintiff bar was clear that they were going to have nothing to do with a cap or any limits to the status quo (can you blame them)? There was only one card left to play and that was the No-Fault card.

  9. Linda says:

    There are many ways to lower the cost of crashes in BC. Notice I said “crashes” and not accidents. Unless you have a medical issue behind the wheel why are you crashing? How about you’re going too fast, too close and think “I’ll never be at fault” Why is Driver Training not mandatory? Check out how Germany trains their drivers. Why are 16 yr olds allowed to ride the fastest production Motorcycles? How about mandatory Motorcycle Training? Why are there 700 Horse power cars on the road? Don’t even start with “Professional Drivers” Ever watch Highway trough Hell on TV?

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