ICBC statement on upcoming Insurance Bureau report
March 19, 2019
In a post on The Orca website on March 14, the Insurance Bureau of Canada (IBC) previewed the latest of its reports which – unsurprisingly for the association representing private insurers – will likely come to the conclusion that private insurance is the only answer to our auto insurance challenges in British Columbia.
While we know our auto insurance system in B.C. has been facing extreme challenges in recent years, we also know major reforms are coming on April 1, and then on September 1, which we believe will go a long way to addressing those issues. If they don't, government committed in this year's throne speech: "If further action is required, your government will be ready". We have big challenges here in B.C. but, the fact is, government and ICBC are standing up and fixing the problems that ail our system.
According to the IBC's post, this new report will be released this week and will "review the similarities between the BC and Alberta systems and the prices drivers are paying in each." Apparently, the conclusion "isn't pretty for those of us living west of the Rockies." The fact is, however, that Alberta's auto insurance system – like most across North America – is experiencing some very real problems of its own.
On January 7, in Thompson's World Insurance News, the IBC stated that "Alberta auto is in crisis". The basis for the IBC's concerns is the fact that insurance rates in that province have been capped so insurers are only able to raise their rates by up to five per cent each year.
Despite ongoing rate increases in Alberta, this cap has meant insurers are not even able to cover their costs and, as a result, some insurers have now ceased to provide insurance to some subsets of the population, certain communities or to exit the market altogether because they can't even break even. In an edition of Canadian Underwriter on January 14, the IBC called this situation "unsustainable".
This situation is also creating some other serious risks on Alberta's roads. In November, CTV reported that the CEO of one insurer in the province said the situation is so bad it has "created an environment that is endangering Albertans" as, roughly 40 per cent of drivers, are being told by private insurers that they are too great of a risk and are being denied coverage. The same CEO stated: "Unless you're a squeaky clean risk, we don't want you." As a result, "they're out there driving and they're uninsured… if you get hit by one of them… you're now at risk."
This has led to the IBC advocating for the government to remove the rate cap which will inevitably lead to significant rate increases. So, while some drivers may find less expensive auto insurance in Alberta today, it's uncertain how long this will continue to be the case.
Meanwhile, also on the other side of the Rockies, public auto insurance systems in Manitoba and Saskatchewan are thriving, showing auto insurance rates that are lower, on average, than private rates in Alberta and are popular with drivers – something we are working towards here in B.C.
No private insurer could come into B.C. and offer the rates they offer in Alberta – our system and the cost pressures are very different – and the levels of coverage provided to British Columbians far outweigh those in other provinces. As of April 1, for example, our medical care benefits will be six times those offered in Alberta, our wage loss will be almost double and our death benefits triple.
We know the rising cost of auto insurance has been top of mind for many British Columbians and that this is a critical time for auto insurance across Canada – that's why we're currently undergoing the biggest overhaul in our history, doubling benefits, making rates fairer and reducing the burden legal costs put on our system.
Each province needs to chart their own path towards a sustainable system that benefits all its customers. Our job at ICBC is to work alongside government to forge our own path to fixing auto insurance in B.C. – a path we have already taken great strides down to ensure a sustainable ICBC that represents the best interests of British Columbians.