British Columbia motorists who get in a car crash today will find themselves test-driving the province’s radically changed auto-insurance system.
A cap of $5,500 on pain and suffering claims for minor injuries in car crashes begins April 1.
It’s part of the largest overhaul to auto insurance since the Insurance Corp. of British Columbia was created in 1973.
The goal is to save money.
The Crown corporation is teetering on the verge of insolvency and is on track to lose almost $3 billion in two years because of increases in crashes, claims, injuries and legal fees.
The cap, which will dramatically reduce court proceedings on most claims, is projected to save ICBC $1 billion annually.
ICBC rates will also rise 6.3 per cent on Monday.
“When you put together all the changes being made, it’s a generational shift in how auto insurance is being done,” said Attorney General David Eby.
“We have three billion reasons it should have been changed a long time ago.”
The new cap won’t change how you report a crash to ICBC or how much money you get to have your vehicle repaired.
But it will mean you can’t immediately go to court to sue for pain and suffering on “minor” injuries.
A minor injury is newly defined by ICBC as sprains, strains, bruises, cuts and whiplash injuries where symptoms last fewer than 12 months and where nothing is broken. Concussions and mental health injuries are also considered minor, but if those symptoms continue after four months, they fall outside the cap.
It will be up to a person’s doctor — not ICBC — to diagnose the injury, set out a medical treatment plan and determine if the injuries are minor.
If ICBC and the driver can’t negotiate a settlement under the $5,500 cap, the two sides must first go to the Civil Resolution Tribunal — an independent dispute resolution process already used for strata and small claims disputes.
The tribunal forces ICBC and the motorist to negotiate using email, web chat tools and video conferencing.
The tribunal can appoint a mediator and, if a deal isn’t possible, it can also appoint a lawyer who specializes in personal injury and motor vehicle law to make a binding decision.
Only then can a motorist take ICBC to the B.C. Supreme Court for a judicial review of how the tribunal interpreted their pain-and-suffering case.
Not only will the civil resolution tribunal process be used for “minor” pain and suffering, but also for all injury claims valued at below $50,000.
Combined, ICBC estimates that 80 per cent of all claims after April 1 will go to civil resolution instead of court — which it says will help avoid costly legal battles.
Eby has also demanded that for the remaining 20 per cent of ICBC cases that do go to court, there be only one expert medical report on each side allowed for claims valued less than $100,000, and up to three experts and three reports each for all other claims.
That is expected save ICBC millions of dollars.
B.C. was the last province in Canada to have a fully tort-based insurance claims system, meaning you sued to recover costs. Even with the new cap on minor pain and suffering, people can still sue for such things as the cost of future care and loss of wages.
“The system is making a fundamental shift away from a litigation model to a care model,” said ICBC chairwoman Joy MacPhail. “I think that’s going to be good news for those who are in a crash.
“These changes do mean the value of basic insurance coverage has increased. Drivers will have more treatment and support if injured in a crash, regardless of who causes the crash.”
To make up for the lower settlement amounts, ICBC has hiked its coverage for medical treatment from $150,000 to $300,000 and expanded full benefit coverage to at-fault drivers.
The corporation has increased payouts for wage loss, homemaking, funeral cost and death benefits. It will also pay higher rates for medical services such as chiropractors, physiotherapists and psychologists, with the stated goal that most injured people won’t be out of pocket because ICBC will cover 100 per cent of the fee.
Two other notable changes: ICBC has pre-approved more treatments like acupuncture, kinesiology, massage therapy and counselling services, meaning someone can get up to 12 sessions covered without having to see a doctor (up to 25 sessions for chiropractic and physiotherapy). And ICBC has a new $1,000 “alternative therapies” benefit per patient so doctors can be creative in recovery plans for things like gym memberships.
But the new cap-and-benefits regime has received strong criticism from the Trial Lawyers Association of B.C., which represents personal injury lawyers.
The association is preparing a constitutional court challenge to the legislation and has said it will be gathering the “horror stories” of how people are mistreated under the regime.
“There’s a very legitimate concern about a $5,500 cap on someone who has had a concussion four months,” said Opposition B.C. Liberal Leader Andrew Wilkinson. “The bigger issue is whether this kind of tinkering is going to solve our auto insurance problems. And I’m doubtful it is.”
Wilkinson called for a review of “every auto insurance system used in the English-speaking world” to see if ICBC customers could get a better deal under a new model.
ICBC is also under attack from the Insurance Bureau of Canada, which represents private insurance companies. However, even private insurers realize the caps on minor injuries make sense, said Aaron Sutherland, the bureau’s vice-president.
“At the end of the day, I think David Eby deserves a lot of credit for the changes he’s bringing in,” he said. “These are very big and very difficult. They are hopefully going to help improve the financial situation at ICBC. But they are not expected to reduce the price drivers are paying.”
The private insurance companies want to end ICBC’s monopoly on basic insurance and allow the private sector to compete in B.C. as it does in Alberta. Sutherland has argued some B.C. drivers could save up to 60 per cent on their insurance premiums with private competition like Alberta.
Alberta brought in a minor injury cap in 2014, in response to calls from private insurance companies for help in saving money. The cap has increased from $4,000 to $5,202 since then.
But the savings from capping minor injury claims have been less impressive than what the government had hoped. That may be because court challenges have set far more types of injuries outside the cap than the Alberta legislature first intended, said Barbara Billingsley, a law professor at the University of Alberta who researches that province’s insurance model.
“What’s happened is that people have been making arguments as to why their particular injury does not fall to the cap,” she said. “The courts have been sympathetic to that. So we have all these court decisions that are interpreting the injuries that fall under the cap more narrowly than regulators had anticipated.
“In terms of limiting damage recovery, it has not been as successful as some people had hoped it would be because the courts have allowed some people out of the cap.”
The result has been to replace one set of legal costs from lawyers fighting minor injury claims with another set of legal costs from lawyers fighting the government’s interpretation of the definition of minor in court, said Billingsley.
“It saves one kind of litigation but it generates others,” she said. “It becomes kind of a rolling industry unto itself.”
Alberta has also capped how much insurance premiums can increase annually. That’s angered the private insurance sector, which has warned of a “crisis” brewing in the system where private companies only want to insure the least-risk drivers that offer the highest returns.
Eby has said that’s exactly the kind of situation the government wanted to avoid when it created ICBC in 1973.
Once B.C. drivers digest the minor injury caps on April 1, more insurance changes lie on the horizon for September. That’s when the government will change the formulas it uses to calculate all auto insurance premiums, in an attempt to shift more costs onto higher-risk drivers.
Those rate changes will increase prices for young drivers and families who share vehicles — though the government insists most single drivers with good crash histories will get a break on their insurance costs.
The new rules will touch on a host of sensitive issues for ordinary motorists, including reducing the number of free at-fault crashes for drivers, lengthening the time it would take to return to basic auto insurance discounts after a crash, and requiring vehicle owners to register other people who might drive their car or face a penalty.
The sheer scope of the changes to auto insurance will likely ruffle the feathers of drivers who get into a crash after April 1 or renew their insurance under the new rate regime after September.
But Eby is unapologetic. The losses at ICBC are too great a risk to the government, he said. And this may not be the end of the changes. “Really what these changes are going to do is stop the bleeding,” said Eby.
“We have more work to do in terms of a larger discussion of how ICBC exists and provides services. … It’s hard to have that discussion when water is pouring into the boat. So we’re going to patch up the major holes, and that will give us the time to have the larger discussions about ICBC in the future.”
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What’s changing at ICBC
The government-run auto insurer is dramatically changing its insurance model, starting April 1.
• If you get in a vehicle crash after April 1 and have “minor” injuries, your compensation for pain and suffering will be capped at $5,500.
• ICBC defines “minor” as cuts, scrapes, bruises, whiplash and other injuries that last fewer than 12 months. Concussions and mental health issues are also considered “minor” if they last for fewer than four months. Broken bones and injuries that persist fall outside the cap and allow someone to sue.
• Instead of court, minor injuries and all injury claims valued at less than $50,000 must be settled the Civil Resolution Tribunal, which uses online mediation and facilitators.
• ICBC is increasing medical benefits for things like wage loss and homemaking, while adding more pre-approved treatments like acupuncture, kinesiology, massage therapy and counselling services that don’t require doctor approval.
• You can still go to court for such things as the cost of future care and loss of wages.e