BC’s auto insurance system has suddenly become an election issue

A fight over the future of ICBC has emerged in the final stretch of BC’s provincial election campaign.

MoveUP, the union representing thousands of ICBC employees, released details Tuesday from a September 29th letter written by BC Conservative interim leader Lorne Doerkson to groups connected to the legal and insurance industries.

The letter outlines several significant changes a Conservative government would consider, including replacing ICBC’s current Enhanced Care system and potentially opening auto insurance to more private competition.

MoveUP says those changes could lead to much higher insurance premiums for BC drivers.

The BC NDP quickly jumped on the issue on Tuesday, October 6th, arguing the letter shows the BC Conservatives have made commitments about ICBC that have not previously been made clear to the public.

According to portions of Doerkson’s September 29th letter released by MoveUP, a Conservative government would introduce legislation during its first year to change the current ICBC system.

“We’ll replace the NDP’s no-fault ICBC scheme,” Doerkson wrote.

The letter also says the government would “get out of the legal profession’s business” and consider changes that would give people injured in crashes greater ability to pursue compensation through the legal system.

Doerkson also raised the possibility of allowing more competition in BC’s auto insurance market.

“Everything’s on the table, including opening auto insurance to private competition,” his letter states.

MoveUP argues those changes would make insurance considerably more expensive; however, that is the union’s prediction, it is not an established figure for what BC drivers would pay under a Conservative government.

What does BC have now?

BC’s current system is called Enhanced Care and was introduced in 2021.

It is often called “no-fault insurance,” although that term can be confusing.

ICBC still decides who is responsible for a crash, and causing a crash can still affect what a driver pays for insurance.

The major difference is what happens when someone is injured.

Under Enhanced Care, people injured in crashes can receive treatment, rehabilitation and income-replacement benefits regardless of who caused the crash. In most cases, an injured person cannot sue the other driver for additional compensation.

Before Enhanced Care, lawsuits and settlements played a much larger role in the system. Someone who was not responsible for a crash could sue the at-fault driver, and personal injury lawyers were commonly involved in those claims.

Removing most lawsuits also removed a significant amount of legal costs from ICBC.

ICBC says moving to the care-based system saved approximately $1.5 billion and allowed the public insurer to reduce rates.

Insurance rates dropped

When Enhanced Care was introduced, ICBC’s basic insurance rate was reduced by 15%.

The provincial government says the average customer initially saved approximately $496 annualy, or 28%, compared with what they had previously been paying.

Basic ICBC rates have remained unchanged since then and are currently scheduled to stay frozen until March 31st, 2027, marking seven consecutive years without an increase.

That doesn’t necessarily mean every driver’s total insurance bill has stayed exactly the same. What someone pays can still change depending on factors including their driving history, vehicle and optional insurance coverage.

Why does MoveUP say rates could double

MoveUP argues that bringing more lawsuits and lawyers back into the system would also bring back costs that were removed when Enhanced Care was introduced.

The union is also warning against opening BC’s auto insurance market to private competition.

To support its argument, MoveUP pointed to a 2022 Ernst & Young study comparing insurance premiums for different types of drivers across Canada.

For example, the study compared an 18-year-old male driving a 2012 Honda Civic. The provincial average used in the study was $2,551 in BC, compared with $5,936 in Alberta.

Another example looked at a couple in their early 30s driving a Toyota Tacoma. The comparison was $1,639 in BC versus $4,270 in Alberta.

MoveUP says those examples show what could happen if BC moved toward an insurance system more similar to Alberta’s.

However, those numbers come from a 2022 comparison of specific driver profiles. They do not establish that every BC driver’s insurance would double if the BC Conservatives changed the system.

BC Conservatives say changes are meant to lower costs

The changes outlined in the Conservative leader’s letter state they are intended to replace the current system with a different model, potentially giving drivers more choice and restoring some ability for people injured in crashes to seek compensation through the courts.

The disagreement between the three groups is over what those changes would ultimately cost.

MoveUP and the BC NDP argue returning legal costs to the system and introducing private competition would push premiums higher.

The Conservatives argue changes to the current model could give British Columbians more choice while improving the way people injured in crashes are compensated.

BC NDP questions Doerkson over letter

The issue quickly became political Tuesday.

The BC NDP says Doerkson was questioned by reporters about the September 29th letter and responded that “there’s been no promises made by me at all.”

The NDP argues that conflicts with language contained in the letter, including statements that a Conservative government “will bring in legislation” during its first year and “will replace” the current ICBC model.