IBC: B.C. drivers pay significantly more for auto insurance than neighbouring Alberta

Published: March 22, 2019

Updated: April 1, 2019

Author: Luke Jones

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According to the private insurance industry’s consumer representative, British Columbia’s auto insurance premiums will soar above those of neighbouring Alberta on April 1. Citing a report, the Insurance Bureau of Canada (IBC) has repeated its call for private auto insurers to enter B.C. as providers of basic coverage.

An MNP study points to motorists paying up to 60% more for auto insurance in B.C. for similar policies. The Insurance Corporation of British Columbia (ICBC) has introduced several cost-cutting initiatives but MNP shows drivers will continue to pay much more than consumers in Alberta.

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

The price difference occurs despite both B.C.’s and Alberta’s auto insurance systems have the following similarities:

  • 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 BC and $43,211 in Alberta (2017).

IBC points out one difference in both markets is Alberta allows competition from private insurers, while the crown corporation ICBC is a monopoly on mandatory auto insurance in British Columbia. It is a system that has recently proven to be broken.

Two years ago, an EY report into the auto insurance system in B.C. found the ICBC was operating on an unsustainable model. The company was facing increased claims and higher cost of repairs, since losing $1 billion per year. Last month, David Eby, the overseer of the company and attorney general in British Columbia, says the situation is worsening. Through the first nine months of its fiscal year, the public auto insurance provider lost $860 million. Significant losses were expected, still the final number surpassed the predicted losses by $273 million.

In a press release, IBC says prices in B.C. continue to soar:

“BC drivers pay the highest auto insurance prices in Canada, with annual premiums averaging $1,680. Current reforms in BC are not expected to reduce prices; in fact, ICBC is forecast to increase prices by nearly 25% over the next three years, beginning with the 6.3% basic rate increase on April 1, 2019.”