British Columbia’s insurance dilemma

By CRM staff 

Toronto, Ontario — March 21, 2019 — As of April 1 British Columbia and Alberta will have substantially similar auto insurance systems, the key difference, however, will be the price.

A recent MNP study found that B.C. drivers pay up to 60 percent more for auto insurance as compared to those in Alberta with similar coverage’s. The study also found that B.C. drivers will continue to pay more even after adjusting for Insurance Corporation of British Columbia’s (ICBC’s) new risk-based pricing structure that will come into effect in September of 2019.

“With the changes coming on April 1, the auto insurance systems in B.C. and Alberta will be substantially similar, with the key difference being who sells auto insurance in each province. That difference has contributed to drivers in B.C. paying more than their neighbours in Alberta for similar coverage,” said Susan Mowbray, senior manager, MNP.

As of April 1, 2019, both B.C.’s and Alberta’s auto insurance systems will have: 

  • Tort-based systems with the ability to sue for pain and suffering;
  • A limit on pain and suffering awards for minor injury claimants;
  • Restrictions on the use of experts and expert reports;
  • Similar mandatory coverage levels;
  • Similar average injury claim costs: $50,658 in B.C. and $43,211 in Alberta (2017).

B.C. rates remain higher primarily due to the province having public insurance, eliminating competition from the market to drive down prices.

MPN’s study obtained quotes, verified with an insurance broker, for 15 driver profiles in each province, comparing the price of auto insurance for the same drivers, with the same accident history and the same vehicles, in comparable locations, and at the same coverage level across both provinces. The comparison found, for example, a 55-year-old woman living in Vancouver with one at-fault accident who drives a 2016 Toyota Camry would pay $2,129 with ICBC, which is $730 more than what the same woman in Calgary would pay for comparable coverage.

“This study gives an apples-to-apples comparison of the price drivers are paying for similar auto insurance coverage in B.C. and Alberta, and clearly demonstrates the price impact of ICBC’s monopoly. With drivers in B.C. paying up to 60 percent more for similar coverage than their counterparts in Alberta, the time has come to introduce competition into the B.C. marketplace and give drivers the choice they deserve,’ said Aaron Sutherland, vice president, Pacific, ICBC.

According to data from ICBC and the General Insurance Statistical Agency (a statistical agency created and overseen by provincial insurance regulators), B.C. drivers pay the highest auto insurance prices in Canada, with annual premiums averaging $1,680. Current reforms in B.C. are not expected to reduce prices; in fact, ICBC is forecast to increase prices by nearly 25 percent over the next three years, beginning with the 6.3 percent basic rate increase on April 1, 2019.

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