The Insurance Bureau of Canada’s Pacific vice-president will be in Kamloops on Thursday to speak to the local chamber of commerce about privatizing the auto insurance market in B.C.
The bureau’s Aaron Sutherland said British Columbians pay up to 60 per cent more for their auto insurance under the Insurance Corporation of B.C.’s monopoly system than do drivers in neighbouring Alberta, who have the option to shop around.
“You have to purchase your basic insurance from ICBC and you pay far more because of that,” Sutherland told KTW.
The bureau is advocating for private insurance in B.C., and recently released a report stating B.C. drivers pay between 13 to 60 per cent more than Albertans for comparable coverage.
The study, produced by business advisory firm MNP, obtained insurance quotes for 15 drivers with the same driving record, using the same vehicle, and purchasing the same coverage levels across provinces — the major difference being the seller in each province, Sutherland said.
ICBC DISPUTES REPORT
One example showed a middle-aged woman living in Kamloops with one at-fault accident paid about $450 more than she would have in Medicine Hat, Alta.
“We believe it’s time to open ICBC up, give every consumer the ability to shop around for the best product at the best possible price,” Sutherland said.
In response to the report, ICBC has said no private insurer could enter the B.C. market and offer the rates offered in Alberta.
“We’ve heard these statements before,” Sutherland said. “If they’re [ICBC] so convinced by that, we believe they should prove it. They should compete for customer’s business.”
Sutherland said the public insurer wouldn’t be opposed to privatization if it was offering as efficient and effective insurance as it could be.
Inviting other insurers could bring in expertise from other provinces and help improve the affordability, Sutherland told KTW.
A TALE OF TWO MARKETS
In B.C. ICBC is responsible for providing mandatory auto insurance, while optional coverage is sold through a network of about 900 brokers.
In Alberta, auto insurance is sold through a competitive market, with about 43 companies selling both basic and optional auto insurance.
David Eby, B.C.’s attorney general and the minister responsible for ICBC, responded to the report in a Facebook post.
He said the Insurance Bureau of Canada has a vested interest in privatizing auto insurance and cited an independent review conducted by the government of Saskatchewan that showed the lowest rates in Canada are offered by provinces with public insurers.
A RATE COMPARISON
According to lowestrates.ca — an online rate comparison site for insurance, mortgages, loans and credit card rates in Canada — B.C. has the highest average rates, but there are public models cheaper than Alberta.
The average rate for insurance in Alberta is $1,251, compared to $1,680 in B.C. In Ontario, which has a private insurance model, the average is $1,445. The public system in Saskatchewan has an average rate of $936, while the public system in Manitoba has an average rate of $1,080, according to the website’s data.
Lowestrates.ca also found average auto insurance rates continue to rise inAlberta and Ontario, with Alberta seeing the steepest increase in the country — 11.22 per cent since the first quarter of last year.
The average cost of auto insurance is up 9.06 per cent for Ontario drivers over the same time period.
“Auto insurance rates have been on the rise for more than a year now and this happens for a number of reasons that are typically outside of the average driver’s control — more instances of fraud and a greater number of accidents, for example,” said Justin Thouin, co-founder and CEO of lowestrates.ca.
“While overall rate increases won’t affect every driver, if you are affected, this is a great opportunity to shop around for more competitive insurance plans.”
Sutherland said challenges and cost pressures are being seen in auto insurance across the country, but stressed the fact the highest average premiums in Canada are in B.C.
OVERHAUL ON HORIZON
“The private insurers who are driving insurance rates into the stratosphere in Alberta and Ontario shouldn’t be coming to our province and telling us how to fix things,” Eby said.
He said B.C. is about five years behind a much-needed overhaul of its auto insurance system due to delays from the previous B.C. Liberal government that he said cost the province about $3 billion.
According to ICBC, changes enacted on April 1 make medical-care benefits six times that offered in Alberta, while wage-loss benefits are almost double and death benefits triple.
The BC Utilities Commission approved ICBC’s request for an interim 6.3 per cent basic insurance rate increase effective April 1— an average increase of close to $60, according to ICBC.
Broader structural changes to rates, when added to the basic-rate increase, will see about 25 per cent of customers get a decrease in their basic rate, 42 per end up with an increase of between zero and 6.3 per cent and 33 per cent facing a larger increase.
SOLD TO THE LOWEST BIDDER?
At the end of the day, Sutherland said, mandatory basic auto insurance is being sold at lower average prices in Alberta than in B.C.
“That doesn’t make sense. There is another way,” he said.
— with files from the Vancouver Sun