Over the past five years, ICBC’s premiums for basic car insurance have risen nearly 30 per cent. The company isn’t saying what it has in mind for the period ahead. But we can be sure that by any standard, car insurance is going to cost more over the next few years, and possibly a lot more.
The minister responsible, David Eby, has tried to soften the blow by giving drivers with an accident-free history a small break at the outset. In the year ahead, they might see their premiums drop by about $50. The remaining drivers, with poor records, will face substantial increases.
However, Eby has refused to say what the longer term holds, and the reason isn’t hard to see. The changes so far are revenue neutral: The extra money raised by imposing higher rates on bad drivers is given back to those who’ve stayed out of trouble.
But ICBC suffered an estimated $1.3-billion loss last year. Revenue-neutral changes won’t alter that.
It’s at this point that things become confusing. If premiums continue their upward march, B.C. will soon have the highest car-insurance rates in the country. We are already second, after Ontario.
While policy holders in this province pay an average of about $1,100, by some reports prices in the Atlantic provinces are closer to $730. The cost in Quebec is $640.
Why is ICBC losing money, when its rates are sky high?
The answer given by the company is that the frequency of crashes has risen substantially. From 2013, when 260,000 crashes were reported, the number in 2016 climbed to 330,000, a 30 per cent increase.
But according to Transport Canada, the number of crashes that involved fatalities or injuries fell over this period, nationwide.
Again, the B.C. Coroner’s office reports that traffic-related fatalities remained basically unchanged between 2012 and 2017. Fatalities are only one measure of accident rates. But there is nothing like a 30 per cent increase.
Are our crash rates really up that much, or are more people reporting minor accidents in hope of a payday?
Eby appears to suspect so. He has capped pain and suffering awards, and is trying to divert accident claims from the courts into a civil resolution tribunal.
The idea is both to limit awards and to reduce the company’s legal fees, which are 24 per cent of its budget.
But can the measures announced so far turn around a $1.3-billion loss? And what if they cannot?
It might be time to consider more radical steps. When our rates are out of line with the rest of the country, the problem might not be confined to bad driving.
Perhaps the corporate model is, at least in part, to blame. ICBC has a monopoly on basic automobile insurance. That’s not a system known to promote efficiency or innovation.
The company argues that having a public system reduces the number of people who drive without insurance. But it’s not clear why that should be so. It is illegal to drive uninsured, regardless of who sells the policy.
It seems unlikely an NDP government would consider allowing private companies to compete in this market. Even the business-friendly B.C. Liberals showed no such intention.
Then again, ICBC used to be a cash cow for government. Billions were raked into the treasury to help balance the budget. Those days are gone.
For now, the weight rests on Eby’s shoulders. But he must understand that the public’s patience is limited.
If a monopoly provider cannot reduce premiums to acceptable levels, it might be time to see if there is a private operator who can.
