Report says competition would bring significant savings to BC’s auto insurance market

A report entitled The Benefits of Competition in the Provision of Automobile Insurance in BC, commissioned by the Insurance Bureau of Canada (IBC), the national industry association representing Canada’s private home, auto and business insurers, concludes that competition would bring significant savings to British Columbia’s auto insurance market.

Currently, all drivers in B.C. are covered by auto insurance company ICBC (Insurance Corporation of BC).  By law, any vehicle registered and driven or parked on public streets in British Columbia must be covered by ICBC’s basic insurance package, which can be purchased from independent brokers across the province. This basic coverage, called “Autoplan,” includes protection from third party legal liability, under-insured motorist protection, accident benefits, hit-and-run protection, and inverse liability.

“Under the ICBC monopoly, drivers in British Columbia are paying the highest auto insurance premiums in Canada,” said Aaron Sutherland, vice president, Pacific, IBC. “This report shows that opening BC auto insurance to competition and choice would bring significant savings to BC drivers and would improve the affordability of auto insurance in British Columbia”

The report found that Canada’s private insurers have developed product innovations and new ways to reduce claims costs that could lower premiums for drivers, if they were allowed to operate in BC.

Bundling home and auto insurance alone could save drivers between $85 and $225 annually.

According to the report, further potential savings to policy holders include:

Basic autoplan savings between $18 and $40 annually from improved claims handling

Optional product savings between $24 and $60 annually if Optional insurance were open to full competition

Safe drivers (who represent a majority of BC drivers) could see their premiums reduced up to 18% from an improved pricing structure that based premiums on factors highly correlated with risk, such as claims history and kilometers driven

“This report offers a glimpse into how competition can benefit BC consumers,” said Sutherland. “Given the significant challenges facing our auto insurance system, British Columbians deserve to be able to choose the auto insurance provider that best meets their needs. Canada’s private auto insurers are ready and eager to bring choice and savings to BC drivers.”

ICBC posted a loss of $935-million for the first nine months of its 2017/18 fiscal year ending March 31 and is forecasting a total loss of $1.3-billion for the full year.

By comparison, in the first nine months of its last fiscal year, the net loss was $232-million, and the loss for the entire year was $533-million.

ICBC blames the increasing loss on the number of crashes occurring across the province.