Call revived to end ICBC car insurance monopoly

Private insurers advocate for access to vehicle insurance marketplace

Poor driving habits of British Columbians are leading to more accidents while ICBC is drowning in annual financial losses despite having a monopoly on the auto insurance industry.

Both of those factors generated different reactions in recent weeks from those with a stake in B.C.’s auto insurance industry.

Aaron Sutherland, vice-president, Pacific region, for the the Insurance Bureau of Canada, renewed his organization’s call to open up the car insurance business to the private sector, saying ICBC’s monopoly has led to complacency in developing new insurance products to reduce rising premiums.

“When competing for your business, companies must continually innovate, develop new products and endlessly strive to deliver the best possible service because they have to or they won’t survive. It is not rocket science,” said Sutherland in a news release earlier this month.

“Opening up B.C.’s auto insurance marketplace is the best way to ensure drivers receive the best insurance product at the best price.”

Meanwhile ICBC is looking to direct more funding to police enforcement, generating the funds for new initiatives by cutting its advertising budget in half.

In the 2019-20 fiscal year, ICBC will spend an additional $2.4 million for enhanced traffic enforcement across the province, raising the Crown agency’s annual investment in road safety to $24.8 million.

That is in response to last year, where 350,000 auto crashes were reported in B.C., a record high.

In an interview with Black Press, Sutherland said there is no connection between privatizing auto insurance and B.C.’s spiralling accident statistics.

“ICBC’s problems are not just about the accident rate. We are on par with the Canadian average. The problems you see in Kelowna with road safety are no different than in Kitchener (Ontario),” Sutherland said.

“With ICBC being a monopoly, it has been slow to respond in the marketplace with innovative or new products to help address these challenges.”

He acknowledged car repair costs have skyrocketed over the past decade, due in part to technology features being added to vehicles.

“Ten years ago, replacing a car bumper was a pretty routine thing to do, but today it costs $10,000 because of the technology equipment now involved with a bumper.”

Sutherland argued penalties for bad driving and incentives for good driving habits are lacking in ICBC’s insurance options, noting significant increases Attorney General David Eby warned B.C. drivers about earlier this year are not prevalent elsewhere in private insurance marketplaces.

He noted a survey commissioned by the Insurance Bureau revealed in January a potential savings of up to $325 for drivers by bringing competition into the B.C. auto insurance marketplace. He said it shouldn’t be surprising surveys have indicated up to 80 per cent of B.C. drivers want more insurance options.

ICBC was originally created by the NDP government in 1973 in response to several factors—the high cost of accident litigation under private insurance at the time, motor accident cases were plugging up the entire legal system and large numbers of uninsured motorists, especially young drivers, were being refused insurance by private operators.

“A lot has changed, particularly in the rural areas of the province, in the auto insurance market. What made sense 50 years ago may not make sense today,” Sutherland said.

“That’s why it is now best to improve the system and bring the most value to bear you have to consider all the options. One of those is seeking solutions outside of ICBC by bringing the best practices of private auto insurance across North America to improve auto insurance affordability.”

Paul Hergott is a West Kelowna lawyer is specializes in ICBC accident claims and is a long-time advocate in the Okanagan for enhancing safe driving practices.

From a lawyer’s perspective, he said fighting ICBC, or a private insurer, in court on behalf of his accident-victim clients involves the same legal process.

But Hergott cautioned the private insurance industry doesn’t have the same incentives to promote road safety ICBC has, and rewarding drivers with no claims doesn’t resolve what he points out is an alarming escalation in traffic accidents.

In the years leading up to 2010, the accident numbers were on the decline year over year, falling to 260,000 in 2010. That all began to change by 2014, when 280,000 crashes occurred, peaking this year at 350,000.

Hergott feels there is a direct connection between that accident increase and the provincial government’s policy decision to ban drivers from using hand-held technology devices while operating a vehicle, but allowing access to use of hands-free technology.

“That has been my mantra and as much as people are probably tired of me talking about it, stepping up enforcement with RCMP to catch people using hand-held devices does absolutely nothing for road safety because people just switch to hands-free technology,” he said.

“From a driver’s distraction perspective, both are equally bad but this government policy has in effect said it is okay to multi-task behind the wheel just like we do with everything else.

“By jacking up the penalties for hand-held device tickets, you are only really taxing those who can’t afford hands-free technology. If we could all afford it, we’d all have hands-free cell phones in our vehicles and how does that enhance road safety?”

He said auto insurance premiums should reflect poor driving habits, creating consequences for drivers who are inattentive when driving, but instead ICBC has chosen to focus on victims’ rights, imposing limits on injury claim costs.

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