The Insurance Bureau of Canada (IBC) has today issued a press release on behalf of private auto insurance carriers in Canada applauding the decision of the British Columbia (B.C.) government to push through its legislation for a $5,000 cap on general damages for minor injury from auto accidents.
Earlier this year, the government in B.C. proposed the cap and has now said it will be passed and effective from April 1, 2019.
David Eby, the Attorney General for British Columbia and the minister in charge of the Insurance Corporation of British Columbia (ICBC), has been vocal about the insurer’s financial problems. Speaking to Canadian Underwriter on Tuesday, he offered arguably the first concrete strategy towards fixing the broker public auto insurance company.
The ICBC recorded over $900 million in losses through the first nine months of its fiscal year, following a report last summer that showed the company is in financial trouble. It is believed auto premiums in B.C. would have to be raised by 30% to break even. Eby has said this will not happen, although premiums have increased by around 10%.
Even so, the ICBC is still in trouble and people are hunting for answers. Eby has consistently blamed the former Liberal government for taking nearly $2 billion surplus from the Crown Corporation. He has also ruled out allowing private companies to offer mandatory auto insurance in B.C.
With the minor injury cap, it is believed some of the pressure on ICBC can be eased. The IBC says other provinces have shown a cap can help control costs.
“A minor injury cap has been used effectively in other provinces to help control costs and limit the rate pressures facing drivers, without limiting their access to the care they need,” said Aaron Sutherland, Vice-President, Pacific, IBC. “Drivers in BC pay more for auto insurance than in any other province in Canada. These reforms are an important first step to limit the rate increases facing drivers in the years ahead.”
“Today’s changes will help relieve the financial pressure facing the Insurance Corporation of British Columbia (ICBC), but are unlikely to reduce rates for BC drivers,” Sutherland continued. “Opening ICBC to competition and giving drivers the ability to shop around for their auto insurance would bring significant savings, and must be part of any long-term solution to the challenges in BC’s auto insurance system.”