Canadian Underwriter

In defence of public insurance

January 7, 2019   by Jason Contant

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British Columbia’s public auto insurer is challenging the view that opening up the market to competition will create efficiencies and better accident benefits.

The Insurance Corporation of British Columbia (ICBC) was responding to comments from the Canadian Federation of Independent Business (CFIB) saying “it’s clear that the solution to the challenges in B.C.’s auto insurance system must be found outside our Crown insurer.” Richard Truscott, CFIB’s vice president for B.C. and Alberta, said Dec. 10, 2018 that “other provinces have more affordable insurance with better benefits. It’s time to end the monopoly and let competition create efficiencies and reduce costs.”

ICBC contacted Canadian Underwriter in response to these comments, saying insurance rates in B.C. cannot be directly compared to other jurisdictions.

“It’s simply not an apples-to-apples comparison,” said Bill Carpenter, ICBC’s vice president of insurance. “B.C. is the last province in Canada with an unrestricted litigation-based insurance model – a full tort system with no current restriction on what you can sue for, no matter how small your injury. A full tort product is simply more expensive compared to one with caps/limits, or no fault systems generally.”

In addition, there are other factors explaining why jurisdictions may not be directly comparable, Carpenter said. For example, other provinces may have more rural communities, less congestion, drier climate or a different geography, for example. “ICBC’s Basic premiums also include components to cover driver licensing fees and road safety costs,” he added.

“When it comes to the suggestion that other provinces have better benefits, early this year ICBC announced significant improvements to its accident benefits – changes which will make ICBC’s accident benefits by far the most generous of tort systems across Canada.” For example, the overall medical care and recover cost allowance will be doubled to $300,000 retroactive to Jan. 1, 2018 and there is a new limit of $5,500 on pain and suffering for minor injury claims.

Other unique factors in B.C.:

  • A full tort product allows the claimant to sue for pain and suffering awards, a right that isn’t allowed in a no-fault jurisdiction.
  • Un/Underinsured Motorist Protection (UMP) is also included in Basic premiums. In other jurisdictions, UMP has to be purchased separately, for an additional premium.
  • Private insurers in B.C. generally exclude liability from their Optional coverage for vehicle damage over $1,000 resulting from hit and run crashes. This forces Basic insurance to pay for that damage, adding to the cost of Basic insurance for all B.C. drivers.

Although the CFIB’s Truscott had argued competition would create efficiencies and reduce costs, Carpenter disputes this. He said ICBC’s operating model – one characterized by centralized claims handling – creates numerous efficiencies. “Centralized claims handling means a customer can be served from anywhere in the province; all records of previous crashes, repairs and so forth are stored and easily retrieved by the company and its collision repair partners, making it more convenient for customers.”

In CFIB’s survey, 1,015 small- and medium-sized business owners in B.C. were asked if the provincial government should allow private insurers to sell basic auto insurance. Nearly three-quarters (73%) wanted the change, compared to 11% that opposed. Fifteen per cent were undecided and 1% had no interest.

ICBC reported late last month a net loss of $582 million for the first six months of the current fiscal year and projected a year-end financial loss of $890 million for 2018/9. On Jan. 2, the British Columbia Utilities Commission approved ICBC’s application for a 6.3% increase to basic insurance rates on an interim basis for all new and renewal policies with an effective date on or after April 1, 2019.

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12 Comments » for In defence of public insurance
  1. Glennis Newcombe says:

    I have worked for both ICBC and private insurers in Ontario. I would say that both products have plus and minus issues. Both providers are suffering financial challenges. Both providers employee adjusters who, unfortunately, do not appear to be fully knowledgeable in the product they provide and are over burdened with heavy case loads. I have always been a strong supporter of ICBC and have always opined that ICBC provides a superior product over private insurers. ICBC provides affordability for new and young drivers. Ontario insurers have been cutting coverage in order to stay competitive or require you to pay more for better coverage. Private companies are constantly being sold. CFIB and the Insurance Institute of Canada have always been openly biased against government insurance. Unfortunately for BC motorists, they won’t realize what they had until its gone.

  2. Alan McNulty says:

    It’s good that ICBC is ‘fighting back,’ explaining it’s activities, what differentiates itself from other legal jurisdictions and how can impact insurance rates. Of course the main issue was dodged, why claims and cash outflows have horrifically spiked the past 4 years, generating huge “losses”-despite revenue increases of 27%. ICBC is a political institution, effectively macro managed by the Cabinet, where the overarching policy decisions are political in nature. Any financial “resolution” must address the politics of ICBC. Auto insurance, whether provided ‘publicly or private’ in Canada is a tax on driving and that is subject to the vagaries and contradictions of political decision making. At the end of this navel gazing exercise, once every 10 years, no gov’t in BC, for political reasons, will eliminate public auto insurance, ICBC, nor allow private insurers to seriously erode the viability of its economic monopoly position. In the meantime the ICBC Board will continue its useful role of impotence and near irrelevance, changing personnel every time the gov’t changes.

  3. Max Salamon says:

    When I am quoted $410 dollars for a windshield that I can get for cash in Alberta for $250 and chip repair is $84 dollars as opposed to $35 one province east I feel I have some understanding of the issue. Please do some REAL reporting and reassure me that ICBC insurer is independant and not getting their coffers raided by the provincial government.

  4. Mark Yates says:

    Icbc can’t succeed in a manopoly they sure as hell wouldn’t in as a competitive company

  5. S p says:

    I got my windshield chip repair at no charge and the glass shop billed $ 26 +tax to icbc.

  6. Sp says:

    It was the stupid liberal government and the idiot gordon campbell who took icbc surplus from icbc as general revenue which if was invested by icbc would have assured stable rates for years to come. The money was needed for the winter olympics.

  7. Wosim says:

    And the mafia said that any completion against them is unhealthy do you believe them?

  8. kirk says:

    ICBC MUST GO, icbc couldn’t compete against private insurance. example my motorcycle 2017 model under ICBC would cost over $3500 per year. please exain why my good friend in Aberta pays $1100 per year same coverage same bike. Second ICBC is your friend when u pay your yearly insurance and extreme awful enemy if u have accident claim. they cover u for nothing and u have fight to get any midterm cover for injury till claim is settled. buttom li e its a monopoly like oil company. Im tried of being ripped off.

  9. Andrew Andreschefski says:

    Icbc has just hired the rcmp to aggressively target drivers for increased revenue while crime rate soars in BC. They are refusing to provide coverage and increased their rates. Yet even though three quarters of the population wants this monopoly removed they still hold a dangerous amount of power in this province. Icbc-God-govt-everyone else is the way it is and little can be done to remedy this. I remember when the liberals raided their coffers (price for absolute power) and the total was 34 million now that number has been inflated considerably…..just sayin.

  10. Ken says:

    When I moved from Alberta to BC in June of 2017 I was shocked when my car insurance dropped from $177 per month to $85. Also I had a lot more coverage because it was so low. One million in Albert to three million it it also includes coverage against uninsured drivers. It also includes roadside service and full coverage when I rent a car anywhere in the US and Canada. Also included is insurance for a storage trailer that I tow from time to time. I love BC insurance. I will admit that I did have a very clean driving record and am sure if I am involved in an accident my rates will go up but look at the difference. I never knew I was being ripped off by private insurance for years but someone has to pay for the CEO’s yacht.

  11. BC DRIVERS Have No Idea about the risks insured by ICBC and the risks excluded, because they are not given an actual policy, only a Certificate, which contains absolutely no information about the those insured risks and exclusion.

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