Why opening up B.C. auto to competition could help even if it doesn’t lower prices

British Columbia motorists would probably benefit from more choice in auto insurance if it means they can start doing more things by phone and online, suggests the co-founder of an online price comparison site.

With the provincial election scheduled Oct. 24, B.C.’s opposition Liberal party reiterated Tuesday its call to allow more competition against the province’s government-run monopoly in writing auto insurance.

“Even if it’s not about price and just about service, this would be a step forward for British Columbians,” said Justin Thouin, co-founder and CEO of LowestRates.Ca, in an interview Wednesday with Canadian Underwriter. “Even if the price stayed the same, if people could do things more by phone, and online, and if there are things like pay-as-you-go insurance or telematics – there are just so many things that we take as standard in markets like Ontario that just don’t exist for British Columbians.”

The Liberals, who held power from 2001 through 2017, said Tuesday that opening up B.C. auto to competition would help motorists shop around for the best price.

Founded in 1973, the Insurance Corporation of B.C. says it is licensed in all classes of insurance but currently only insures auto. Motorists in B.C. must buy basic auto coverage – including $200,000 in liability, $300,000 in first-party medical and rehabilitation benefits, as well as a number of other accident benefits. At the moment, private insurers may compete with ICBC to provide optional additional coverages such as extended third party liability, comprehensive, collision and loss of use.

Related: Why B.C. brokers are not rallying behind Liberal auto insurance election promise

The Liberals promised Tuesday they would end the ICBC monopoly to let motorists buy coverage for collision, comprehensive, specified perils and liability insurance from the private market. They would also give clients the choice to purchase the best rate for accident benefits coverage for bodily harm and injury from either ICBC under a no-fault system or from the private market under a tort system.

“There are so many benefits to be gained by bringing the private market to B.C., and we have tens of thousands of people per year coming to us asking how we can compare the market for them in B.C.,” said Thouin. “When we tell them ‘You have to go to ICBC,’ they say, ‘Why? This doesn’t make any sense.’”

ICBC distributes through about 900 brokers, many of whom seem okay with the status quo.

“Brokers generally have come to grips with ICBC over the decades and have seen the value and the universality of it – not having to turn anyone away, or scramble to find a market or pricing that is reasonable,” said Chuck Byrne, CEO of the Insurance Brokers Association of B.C.

But having a monopoly on auto insurance can put some motorists at a disadvantage, said Thouin.

“Different insurance companies have different underwriting principles and have different views of risk,” Thouin explained. “So, for a single driver, it could mean they could pay significantly less than they are right now if there are multiple insurance companies competing for their business, because one insurance company might view this individual as far less of a risk than ICBC does.”

Then there is the issue of convenience.

“It’s because of innovation that you have seen things like bind online; why you have seen things like telematics; or the ability to go online to make changes to your insurance account,” said Thouin. “Those are things that people in Ontario are very used to and take as just standard. Whereas in B.C., up until COVID, you actually had to go into a broker’s office in order to get your insurance or renew your insurance.”

Thouin was alluding to measures ICBC took this past March to reduce the need to physically go to brokers’ offices after COVID-19 was declared a pandemic.

LowestRates.Ca generates auto and home insurance sales leads for brokers and direct writers through its online quoting system, which is free for consumers.

Feature image via iStock.com/miroslav_1