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Last updated Wednesday, Oct 31, 2018 04:39 PM

Why we need changes to insurance

The number of minor injury claims is at an all-time high, and premiums can't keep up. Despite British Columbians having to pay more for their auto insurance every year, ICBC suffered a $1.3 billion loss last year – this is not sustainable. That’s why we’re making changes to the auto insurance system in B.C.


Soaring injury claims costs

The huge increase in injury claims payouts are a main cause of ICBC’s soaring costs.

The total cost of injury claims in B.C. reached a record $2.7 billion in 2016, which is an increase of $1.2 billion since 2009.

In particular, the average settlement for minor injury claims has increased by 265% since 2000.

Minor injuries include sprains, strains, general soreness, aches and pains, and cuts and bruises. Minor injury claims also cover anxiety and stress from a crash.

By comparison, the average claim paid out for serious injuries - from fractures and broken bones to more catastrophic, life-changing injuries - has risen from $38,014 in 2000 to $48,078 in 2016. This is only an increase of 27%.

What does ICBC pay in an injury claim?

If you are in a crash and suffer an injury, ICBC accident benefits pay for your medical treatment, rehabilitation and wage loss, and may pay for other benefits such as home care, prescriptions and medical devices.

You are also usually paid an amount for pain and suffering (the legal term for the physical and emotional stress caused by the ordeal of the injury). This is over and above the amount provided for medical treatments to help you get better.


Payouts on the rise

Today, approximately half of all ICBC's injury claims have legal representation (51%). Represented claims cost more because they take longer to settle, legal costs are incurred, more expert reports are typically ordered and more medical resources and services are involved. The hard reality is, all B.C. drivers are paying more and more for their insurance premiums to fund the ever-increasing settlements for pain and suffering in minor injury claims.     

What's more, almost half of the settlement isn't even going to the injured person, but towards legal costs and lawyer fees. Of the average $30,038 payout, only $16,080 is received by the customer, after lawyer fees (typically 33% of the award) are paid.

ICBC's legal costs are at an all-time high and account for 24% of annual costs. So, money that could go to injured drivers is instead going to legal costs. This needs to change to put the focus back on care.