The British Columbia government faces tough decisions over how to fix the broker Insurance Corporation of British Columbia (ICBC), but whatever course is taken, competition should be included. A new report commissioned by the Canadian Taxpayers Federation (CTF) says that reintroducing competition into the B.C. market is a vital step.
Over the last month, the provincial insurance company has been under pressure following a leaked report that showed the organization is in financial problems. Recommendations for solving the financial crisis include raising auto insurance premiums by up to 30%.
The province was already facing questions as the second most expensive (after Ontario) insurance market in Canada. If prices were to rise, customers would be priced out. Attorney General (and ICBC head) David Eby has promised rates will not increase by 30%, but solutions are being debated.
CTF says that “fast and furious changes” must be introduced. The initial EY leaked report showed that current basic premiums are not enough to cover the cost of rising claims and auto accidents.
“The average driver in B.C. may need to pay almost $2,000 in annual total premiums for auto insurance by 2019, an increase of 30% over today’s rates, assuming current trends persist, the objective is to have ICBC’s rates cover its costs, and significant reform is not undertaken,” the report suggests.
“The best auto insurance option for British Columbians is wide-open competition,” Milke says in a CTF statement. “Government monopolies made no sense in the 1970s and make even less sense in the age of the internet and easily obtained competing quotes,” he adds.
“When governments interfere in insurance markets, in the policy that should result from actuarial calculations, governments subvert the sound basis for such risk management,” Milke writes.