Unless something significant is done, the average driver will have annual ICBC annual premium (Basic and Optional) auto insurance payments of almost $2,000 by 2019. This represents an increase of 30% over today’s rates.
In 2016, Todd Stone requested an independent review of ICBC rates. Ernst & Young provided the final report, titled “Affordable and effective auto insurance – A new road forward for British Columbia” to ICBC’s board on July 10, 2017. It was received by the new government on July 21.
Today, at the request of Minister David Eby, ICBC has released the full report which can be read here.
From the report:
BC’s auto insurance system is facing unprecedented challenges. Premiums collected by ICBC today are higher than other provinces that have shifted away from a predominantly litigation-based model (they are the second highest in Canada), yet they are not high enough to cover the true cost of paying claims. More accidents are occurring on BC’s roads, and the number and average settlement of claims are increasing. Only recent government intervention has protected BC drivers from the currently required 15%–20% price increases. This rate protection has eroded ICBC’s financial situation to a point where it is not sustainable. The average driver in BC may need to pay almost $2,000 in annual total premiums for auto insurance by 2019, an increase of 30% over today’s rates, assuming current trends persist, the objective is to have ICBC’s rates cover its costs, and significant reform is not undertaken.
In summary, the BC auto insurance system has significant structural problems. However, based on the experience of other jurisdictions, there are proven solutions available — but this additional work needs to start now. This report sets out in detail the key issues putting significant pressure on auto insurance premiums in BC. It also identifies a series of impactful solution options to underpin reform and support a safer, sustainable system.
Five issues were given:
- More accidents on BC’s roads are resulting in more claims
- The number of claims being filed is going up faster than the number of accidents
- Average settlements for minor injuries (such as minor soft-tissue) are increasing
- Claim costs for minor injuries have increased from 30% to almost 60% of total bodily injury claims costs since 2000
- Insurance premiums collected by ICBC do not cover claim costs
This 200+ page report is not a recommendation that rates will increase, but an analysis of projected financial shortcoming if things continue unchanged. The direction of reform will need to be determined by public and stakeholder consultation, investing in change management, dedicated leadership, strong policy and a number of other suggestions.
“The reform of BC’s auto insurance system is not going to happen overnight,” reads the conclusion of the report, “and a thoughtful and measured approach is required.”