More evidence of the need to open auto insurance to competition - The Orca
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More evidence of the need to open auto insurance to competition

Sutherland, Aaron
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The first “apples-to-apples” comparison with Alberta shows BC drivers pay up to 60% more

Last week, my organization – Insurance Bureau of Canada (IBC) – released a report from accounting firm MNP that compared the British Columbia (BC) and Alberta auto insurance systems and the prices that drivers are paying in each.

The report found that as of April 1, the BC and Alberta auto insurance systems will be “substantially similar.” Among the similarities, the review found that both provinces will have:

  • Tort-based systems with the ability to sue for pain and suffering;
  • Limits on pain and suffering awards for those with minor injuries;
  • Restrictions on how experts and expert reports are used in determining the severity of an injury; and
  • Similar average injury-claim sizes.

The biggest differences between the provinces are the price that drivers pay and who sells auto insurance. The government-run Insurance Corporation of British Columbia (ICBC) holds a near monopoly on auto insurance in BC while drivers in Alberta have the benefits of competition and choice.

MNP obtained quotes for 15 drivers in each province that compared prices for the same drivers, using the same vehicles, and at the same coverage levels, in similar locations in each province. It’s the first apples-to-apples comparison of its kind and, unfortunately for those of us living in BC, it found ICBC charges up to 60% more for auto insurance.

Take Bill, a small-business owner who drives a 2014 Ford F-150 for work.
In Surrey, he pays $2,058 annually. In Calgary, he pays $1,399. That’s a difference of $659.

Or go outside the lower mainland and consider Susan. She’s 55 and had an at-fault accident in her 2016 Toyota Camry. In Kamloops she pays $1,573. In Medicine Hat, she pays just $1,125. That’s a difference of $448.

The list goes on. You can see the full report including the 15 driver profiles and a comparison of the prices they would pay in BC and Alberta at BetterAutoInsuranceBC.ca

To no one’s surprise, ICBC took offence with the report. Interestingly, they put out a media release that dismissed MNP’s findings – before even seeing the report. ICBC defended its prices by stating: “Our accident benefits are six times higher… the liability benefits are double, the wage benefits are double. It’s like comparing an Audi A4 to a Honda Civic.”

However, ICBC is referring to the limits of their coverage, not the amount that collision victims actually receive. If you compare payouts, ICBC is the Audi A4 that stays in the garage, leaving claimants to take the bus.

In 2017, ICBC paid out an average of $2,885 per claim in accident benefits for items such as lost wages, physiotherapy and attendant care. In Alberta, the average accident benefits claim was $5,175.

Instead, MNP’s report is yet more evidence that the solution to ICBC’s challenges lie outside the Crown corporation, and that the time has come to allow other Canadian insurers to compete in BC to help improve the affordability of auto insurance for drivers.

ICBC has stated: “No private insurer could come into BC and offer the rates they offer in Alberta.” If this is true, ICBC should have no problem proving it and competing for our business.

 

Aaron Sutherland is Vice-President, Pacific, of IBC, the national association representing Canada’s private home, business and auto insurers.

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