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No fault, no choice, no relief

Sutherland, Aaron
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For years, ICBC has blocked competition in BC’s optional insurance market. Its latest moves try to deny drivers a choice entirely.

The refusal of Insurance Corporation of British Columbia (ICBC) to make claims information publicly available, or provide other insurers with access to a driver’s accident and infraction record – both of which it uses to price its products – means other insurers lack the critical information they need to compete.

It should be no surprise, then, that in moving to a no-fault auto insurance system, the government is taking the opportunity to create new barriers to assist ICBC in further stifling the limited competition in BC’s optional auto insurance market.

The devil, as always, is in the details.

Bill 11, the legislation moving BC to a no-fault system, is light on detail – particularly on how drivers will access the benefits they need to recover from a collision – but there is one notable exception.

The Bill calls for the creation of a new, mandatory Basic Vehicle Damage product from ICBC that covers your vehicle’s replacement and repairs when you are not at fault for an accident. Today, these repairs can be covered by optional insurance, but Bill 11 will move this coverage into basic insurance entirely.

The provincial government makes the case that only it – through ICBC – can be trusted to ensure British Columbians receive what they need to recover from a collision. My organization, the Insurance Bureau of Canada (IBC) – and most of the Western world – would disagree with such a model. But it’s the rationale the government has put forward to defend ICBC’s monopoly since its inception.

There is, however, no policy rationale or public good in expanding ICBC’s monopoly over insurance that relates only to a car’s repairs, or to make it more difficult for other insurers to compete in that market.

A better, more affordable no-fault auto insurance system would allow drivers to purchase all of their vehicle damage coverage – both mandatory and optional – from any insurer they choose.

This is how auto insurance works in Quebec, the province with the lowest premiums in the country. Quebec is a no-fault province where, similar to ICBC’s monopoly on Basic insurance, the government has a monopoly on auto insurance for injury claims.

However, Quebec’s system provides full consumer choice in vehicle damage coverages, whether mandatory or optional. And all insurers have equal access to the data that ICBC refuses to provide.

Quebec’s hybrid system – which allows drivers to choose car insurance from nearly 50 different providers – has resulted in an average premium of $717 a year, less than half of ICBC’s projected average premiums for no-fault coverage ($1,500).

The government seems ideologically opposed to allowing more competition in BC. It’s time to drop the politics and consider the best interest of drivers.

IBC recently put forward legislative amendments that would create a system that allows drivers to shop around for vehicle damage coverage, while leaving intact ICBC’s monopoly over accident benefits.

Shared with members of the opposition, these amendments gave them an opportunity to demonstrate their desire to increase choice in BC’s auto insurance market. Who knows, had they caught any government members absent during their introduction, they may have even passed.

IBC is not calling for an end to ICBC – just an end to its monopoly. If ICBC offers the best coverage at the best price, there is no reason for the provincial government to fear competition.

If ICBC does not offer the best price, then drivers would save money. Shouldn’t that be the priority, especially during these financially difficult times?

Alas, the amendments never saw the light of day.

Instead, as of May 1, 2021, an ever-growing portion of coverage will fall under ICBC’s Basic policy, denying drivers choice and preventing them from shopping around for the best price.

Instead of seeing if other insurers can offer the same coverage for less, we’re moving toward a no-fault system that will only achieve savings by imposing strict treatment limits and depriving people who have suffered serious injuries of any legal recourse if they are not receiving the benefits they need to recover.

There may not be many things insurers and trial lawyers agree on, but we are united on the fact that the government’s no-fault insurance does not serve the best interests of British Columbians.

And it wasn’t that long ago that even Minister David Eby agreed with us: “I don’t see no-fault, as some people do, as a panacea. I’ve seen the harms that it can cause people who are dependent on the existing system on a very firsthand basis [and] I’ve seen the benefits of the tort system for accident victims.”

He was right.

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

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