By: Luke Jones, Published on August 10, 2018 07:21 AM, Last Update on August 10, 2018 04:23 AM
The Insurance Bureau of Canada (IBC) has praised the proposed auto insurance system change in British Columbia. However, the industry representative argues while the decision is a step towards the private market, the province still needs to open its insurance market to competition.
In a press release this week, the Insurance Corporation of British Columbia (ICBC) proposed a new “fair rate” system for basic auto insurance. If approved, the model will be implemented in September 2019 and will help the public insurer become financially viable again.
The new system will put the premium burden on high-risk drivers, placing more responsibility and cost on drivers who are deemed a risk. In a release on Thursday, IBC says these changes are closer to how the private insurance market functions and is a welcome change in B.C. In private-focused markets like Ontario and Alberta, driver risk is already the leading factor for determining premium cost.
“Pricing auto insurance based on driver risk is an effective way to incent better behavior on our roads and reward good drivers,” said Aaron Sutherland, Vice-President, Pacific, Insurance Bureau of Canada. “This change mirrors the way auto insurance is priced in other provinces. In these markets competition puts consumers in the drivers’ seat – with more choice on the products they buy and who they buy them from. This is long overdue in BC.”
Despite praising the proposed change, IBC is still pushing for B.C. to embrace private insurers and bring competition to the province. Now the most expensive auto insurance market in Canada, B.C. is serviced by the public company ICBC, which holds a monopoly on basic coverage. Private insurers only operate in the province to provide additional coverages on the basic policy.
IBC has long called for the market to be opened to private companies to sell basic coverage. This message was reiterated in the press release:
“Competition provides a powerful incentive to ensure that a company is delivering the best product at the best possible price. Auto insurance is no exception to this rule, and Canada's private insurers are eager to better serve the BC marketplace."