Why B.C. brokers are not rallying behind Liberal auto insurance election promise
October 7, 2020 by Greg Meckbach
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British Columbia’s Liberal party, which ruled the province from 2001 through 2017, is promising to open auto insurance up to competition if voters return the Liberals to power in the Oct. 24 election.
“The ICBC monopoly is a failure and it’s time to offer drivers cheaper rates — that’s what competition will do,” Liberal leader Andrew Wilkinson said Tuesday in a release.
The Insurance Corporation of British Columbia, founded as a crown corporation in 1973, distributes mandatory basic auto insurance coverage through about 9,000 brokers.
Insurance Bureau of Canada, representing Canadian home, auto and business insurers, has called for competition in B.C. auto, but the province’s brokers’ association thinks differently.
“This came as no surprise, but as a bit of a disappointment,” Chuck Byrne, CEO of the Insurance Brokers Association of B.C., said of the Liberals’ announcement.
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“Brokers are pretty comfortable with the ICBC system,” Byrne said in an interview with Canadian Underwriter. “We certainly do not get compensated to the same level that we might in a private insurance market, where we might have to navigate that much more for our client.”
For its part, IBC reiterated on Tuesday its call to end ICBC’s monopoly. “Competition is a powerful incentive for any company to deliver the best product at the best possible price,” IBC said in a release. “Auto insurance is no exception to this rule.”
However, over the years, many B.C. brokers have seen the advantage of not having to “scramble to find a market or pricing that is reasonable” for a client, said IBABC’s Byrne. “That can happen in Ontario, Alberta or the Maritimes.”
Byrne suggested it would be “extraordinary” to allow private insurers to come in and compete on a tort product while maintaining ICBC’s transition to a care-based model, initially announced this past February.
“The complexity of having a competitive product from private insurers – having to price higher, and attract business, and deal with claims that are administered between a no-fault driver and a right-to-sue driver – it would complicate things dramatically,” Byrne said of his take on the Liberals’ election promise.
Only Saskatchewan allows motorists a choice between buying tort and no-fault coverage, and the vast majority of Saskatchewan motorists buy the no-fault coverage from Saskatchewan Government Insurance, Byrne said.
ICBC reported a combined ratio of 120% in the year ending Mar. 31, 2020, a 12-point improvement from 132% in 2018-19. ICBC had a minimum capital test ratio of negative 30% this past March, down from negative 7% on Mar. 31, 2019.
The Liberal election promise announced Tuesday is not the first time the opposition Liberals have talked about ending ICBC’s monopoly.
Jas Johal, the Liberal critic for jobs, trade and technology, told Canadian Underwriter in October 2019 that now is the time to “introduce choices in auto insurance.”
The Liberals had majority governments from 2001 through 2017. As a result of the 2017 election, the Liberals had a minority government, which was defeated by the Greens and New Democratic Party in a confidence motion. Since 2017, B.C. has been ruled by a NDP minority supported by the Greens.
With the NDP, ICBC has introduced a number of auto insurance reforms; among them, a care model announced Feb. 6, 2020. Those changes, scheduled to take effect May 1, 2021, would include first-party care and treatment benefits of up to $7.5 million and wage loss coverage that is 60% higher than today. The proposed changes are intended to reduce the cost to ICBC of motor vehicle personal injury lawsuits.
If implemented, the care-based model would mean only about 5% of motor vehicle accidents would result in tort claims, Byrne suggested.
“The overall intent is, only rare occasions and odd circumstances would result in the ability to sue,” said Byrne. “The no-fault concept that the NDP came out with is rock solid from the perspective of the modern need to fulfill the requirements of the population dealing with the social dilemma of driving.”
Feature image via iStock.com/powerofforever
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Unfortunately the excuses provided by the BC brokers are foolish at best, pathetic at worst. The ICBC has, & will continue to, cost Canadians an exuberant amount of money. This is a testament to it’s failure to thrive, let alone function. No competition breeds compliance. Compliance dulls an industry market’s ability to adapt to changing environments’ & destroys’ innovation. No profit, no net economic gain, & worst of all, fundamentally anti-prosperity.
Private business does it better than government, in almost every conceivable manner. Let’s not deny reality & continue to fund a irrefutable provenly failed system. Especially in these times, where the gov. has to find ways to reduce expenditures frantically or else we will see fanatical levels of inflation, due to the governments (of all levels) belligerent, unmonitored, & irrational spending sprees.
If we plan on getting out of this pincer-like quagmire, competition & quantitative deregulation, are the saving grace policies to pursue, for every industry in Canada.
Number 1, your comments tell me you are not from BC and it is obvious you do not no the history and what has occurred under the BC Liberal/Socred party since in power.
BC Liberal/Socred destroyed the concept and ICBC as a whole, they syphoned any/all funds from ICBC to Balance the parties budget. That is what killed ICBC. When ICBC was brought in, it was a non profit Insurance Operation that worked well and premium were very low for the BC Province (due to its terrain, areas, highways, liability exposure, etc). Then a light went on in the BC Liberal/Socred party and said hey “why don’t we just keep on raising premiums, and use that profit to balance the budge and we can just get re-elected on the basis stating we are doing what we are saying we are doing.
This is just a short history, BUT, I wish people wouldn’t comment when they don’t understand what has occurred and don’t use factual information before making comments.
There is not one company that has stepped to the forefront to say ” hey, yah, I want to take on the dollar 1 risk in BC Liability”, because they know it wouldn’t work. There is NOT ENOUGH VEHICLES on the road, to compensate for the amount of liability losses we have, REGARDLESS No fault or not. If it was privatized, there would be too many private companies involved, and therefore not enough premium to spread the cost of the losses between all the insurers.
Don’t mix Trumpism, with Canada, and yet even further, BC.
Your example of how the government failed at the management & implementation of a gov. monopoly only proves my point. It is irrelevant how the system failed, it is doomed to fail. It is the nature of a gov. monopoly as it cannot adapt to changes in markets & does not produce any innovation. As is almost every other instance of government monopoly instead of free market. So whether it was in 2010 when the liberals implemented policies which extracted profits from the ICBC or for the decades preceding it of the slow progressive addition of gov. services that were also offered through the ICBC (making it more cumbersome & inefficient over time). The ICBC is doomed to the whims of whatever party, at anytime, to be exploited, overused, manipulated, etc… etc…As it is a government program. In comparison, the private industry is directed by the forces pressuring the market, not the party that is in power at any one time.
Regarding your point about population limitation to open the market for a private auto insurance industry. This is a totally unsubstantiated claim that has no basis in reality. Population totals do not have this degree of an effect on whether you can have a public insurance industry or private insurance industry. Especially considering the population of BC in 1973, the year the ICBC was started [but I’m sure you knew that] was est. 2.2M, there was more than enough people to allow for a private market. Naturally the NDP created this program as they are tacit supporters of the communist ideology, collectivists, & have since their inception advocated & implemented socialistic programs which have eroded away at our nation’s financial integrity & individuals’ freedom’s. An additionally important point is that if there was private industry which wasn’t restricted, or having to maneuver within various provincial variances in regulatory standards, then private insurance companies could of simply incorporated more people from neighboring provinces, or, reduced the coverages &/or limits available, or a sleuth of other compensatory actions could of been taken.
The big crutch here is that as Canadian’s we’ve become too accustomed to having the gov. manage too many things in our lives. We’ve become complacent & even spoiled. So much so that folks like yourself throw brass & discombobulated insults at anyone proposing the reduction or removal of the free heroin supply that is government. My advocation for a more free market approach, not even a laisse fair free market (which I don’t fully agree with), but simply an increase in free markets, you know, capitalism, will produce more jobs & economic output that will be better for the citizens of BC, the gov of BC, & in-turn all of Canada. We need to open the space for the citizenry to prosper, not infantilize them with more undue, unfair, regulatory jumble to restrict them from reaching their true economic production potential.
Ironically, your comment reflects a great degree of ineptitude in the encompassing subject of economics. Maybe it is imperative you follow your own advice and not comment on issues you know little of. I would even take it a step further & clarify that your clearly ideologically driven by interpreting my advocation for a more free market approach to our country’s, and specifically the insurance, industries’, as ‘Trumpism.’ This is ridiculous, almost as much as you defending an obviously failing socialistic system, which is destroying the economic integrity of our nation & our children’s future potential. Might I add, remember that before we were all exposed to this godforsaken virus from the Communist Party of China, ‘Trumpism’, as in capitalism, produced the greatest economic growth in the United States with the lowest unemployment EVER for EVERY SINGLE racial/religious/ethnic/etc… group in the United States. It included the largest wealth growth for the average family in America in decades. So maybe we shouldn’t be so callously dismissing such a route to consider for our nation. Unless that is, you don’t care about the wellbeing & economic progress of our nation. Which in that case, more socialistic programs will be right up your alley.
I guess I hit it right on the nail head. My initial thoughts of what you were driving at.
And again, stay out of a province you know nothing about. If the “capitalistic” government wanted so bad to get rid of ICBC, called the BC Liberals/Socred, they would have dismantaled it many decades ago, as the “socialistic” government as you would call it was only in power in BC for approx. 12 years of 50 years, therefore you are digging your own hole.
If you don’t think population matters to determine if privatizing auto in BC matters, well you certainly don’t have a clue how Insurance works. When you have one auto insurer in BC instead of opening up the market, you don’t think that waters down the profit pool? Give yourself a shake.
I hope you take even more time responding to my current comments, because I love how much time you are spending trying to make yourself look intelligent.
Your right, it was obviously a big mistake to give enough respect to you to even respond. It’s good to know now that your clearly insincere in your attempt to discuss an important subject. Good luck with your disdain for deliberation.
You are correct, but I certainly don’t mind when it stays on point/topic, but you went way overboard on the actual subject.
Perhaps next time you can stay on point and we can have a great discussion.
“Over the years, many B.C. brokers have seen the advantage of not having to “scramble to find a market or pricing that is reasonable” for a client, said IBABC’s Byrne.”
LOL. You mean like… doing work to shop the markets for your client?
It’s always rate rate rate. I really can’t say that the public is served well by the cheapest product that provides so many benefits.
This concept has been debated to death. ICBC was brought inn when the (private) auto market was a shambles. Companies leaving BC, coverage unavailable or impossibly expensive, many driving uninsured. ICBC fixed all of that and is probably the most efficient company in Canada. Compare executive salaries, broker commission rates, expense ratios for ICBC against any private company. It’s all available on line. Check Intact, Aviva or any. Do the work before you go all trump on us! The Liberals (really Conservatives under an assumed name have looked at privatization myriads of times. The most intensive was appointing Jimmy Pattison’s number one guy as President, with a mandate to sell or dismantle. After a year of intensive study, he was reported to say “that would be a huge mistake”. The same with the next President, Paul Taylor. Before you go all trump on us with bogeymen like “socialism” and the evil left, do your homework. Healthcare is socialized, education is socialized, senior care is socialized. Do you want to go to private health care, education, prisons like the US? You are living in the wrong country. The only problem we have here is we privatize resource development and socialize the resulting mess cleanup, eg, Mount Polley, NS tar ponds, Quebec mercury, Alberta Abandoned wells, etc.
You can blame the NDP for trying to start a ship building industry here and failing. But don’t leave out BC Rail, Tumbler Ridge, HST, Site C. All failures on a scale that makes fast ferries look like bath toys.
Great comments !
I don’t understand how you can have a no -fault system and a tort system at the same time ? I have worked in Ontario Auto under both systems. It must be a legal nightmare but that’s good fir lawyers .
Why have brokers at all under a monopoly no-fault system??? Under WCB there are none and we are heading to a WCB style no-fault which will be bad for motorists and brokers alike.
I think the debate about private vs government insurers is totally flawed. Private insurers struggle with profitability and underwriting in large city markets. They can never really get it right and probably through no fault of their own. Rates are held lowish by regulators, claim costs are high and they simply can’t insure everyone and thus the facility markets and all comers rule creates further pressure. This is such a complex mess that it’s going to be near impossible to fix. IMO, user based insurance through tracking that provides data is probably going to save the auto insurance industry. Bad or high risk drivers pay more based on evidence and data, not the history of 3 years ago.
As for ICBC, until there is a more viable model that shows less of a need for a public insurer, then it is here to stay. Private insurers come and go, consolidate and exit markets. ICBC, is still a sound product, it just needs less government interference.
Update Nov 2 2020 just received notice in mail BelairDirect will no longer provide auto rec or motorcycle coverage neither will Intact
How many others will pull out as May 2021 ICBC changes come into effect?