B.C.’s insurance system is badly flawed and about to get worse, according to the Insurance Bureau of Canada.
Speaking to a luncheon meeting put on by the Duncan Cowichan Chamber of Commerce, Aaron Sutherland, vice president of the Bureau’s Pacific division, said the private sector would do a far superior job to what consumers are currently receiving from ICBC.
“B.C. has the highest auto premiums in the country,” Sutherland said, adding we’re “better drivers than those in Alberta” and about average on a national basis.
“Auto insurance is a challenging industry,” he acknowledged, “repairs have gone up dramatically but only here in B.C. is it causing massive increases in premiums.”
Most provinces leave auto insurance to the private sector, with the exception of Saskatchewan and Manitoba and those two provinces have no-fault structures that have kept their premiums low.
The average B.C. consumer pays $1,680 in annual auto premiums while Ontario at $1,445, Alberta, $1,250 and Saskatchewan, $900 are significantly lower.
B.C. drivers have no choice but to purchase Basic Autoplan Insurance through ICBC and the Crown corporation has what amounts to a virtual monopoly on optional insurance, Sutherland suggested.
“Insurance is a very data driven business. ICBC does not share its information. They don’t allow private insurers to access your driving record.”
As a result, 91 per cent of drivers buy optional packages through ICBC.
Sutherland maintains British Columbians are caught up in a system that is rife with expensive legal battles and conflicts between consumers and ICBC.
“If you have an accident in B.C., over half of all drivers will get a lawyer. They feel they are not being treated fairly and it creates a snowball effect. It breaks down trust between insurer and driver.
“Private insurers have a different approach.”
With losses hitting the billion dollar mark, ICBC’s financial picture is dismal.
Basic insurance rates could jump by 6.3 per cent for B.C. drivers after ICBC submitted an application for a spring 2019 increase. ICBC lost $1.3 billion in the last fiscal year and is projecting a loss of $890 million this fiscal year.
Sutherland says premiums could rise by another 9.5 per cent in 2020.
“Revenues are not covering ICBC’s costs and the rapid deterioration of ICBC’s capital reserves is behind the rapid pace of premium increase.”
Sutherland says ICBC has presented some changes to their system and says his organization can support some of them.
“They would like to set the minor injury cap at $5,500 which we support.”
ICBC is also looking at increasing premiums for inexperienced drivers and increasing the time required to qualify for the maximum good driver discount from nine years to 40 years.
There will also be a requirement for drivers to list all potential drivers of a specific vehicle, a step that will be cumbersome for insurance agents and insurers.
Sutherland says opening up the insurance business to the private sector would benefit consumers through several measures.
“Private insurers settle (claims) earlier which keeps legal costs down. They allow consumers to bundle auto and home insurance which saves money.”
Allowing drivers to purchase insurance online, offering benefits for good drivers and streamlining auto repairs would also save money, Sutherland argues.
“We need to start looking outside ICBC for solutions. The private sector is much more innovative.”