Why ICBC’s Uber insurance is not necessarily good news for rideshare motorists

Published: July 16, 2019

Updated: August 1, 2019

Author: Luke Jones

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Earlier this month, British Columbia finalized its regulations for ride hailing services such as Lyft and Uber to begin operations in the province. Likely to debut in B.C. later this year, insurance for ride-hailing drivers will be handled by the provincial Insurance Corporation of British Columbia (ICBC).

Regulations detailed this month and ready to be in effect in September stipulate ride-hailing drivers working for Uber and other companies must purchase coverage from ICBC. This will be their basic auto insurance package that is mandatory in B.C. and the ICBC has a monopoly over. However, drivers will also have to buy a blanket per-kilometre ridesharing insurance solution on top of their mandatory personal auto protection.

This additional ride-hailing coverage will include third-party liability and accident benefits. When the driver is working and offering ride-hailing services, they will be covered by this additional insurance. When not working for a ride-hailing company and using their car normally, protection will revert back to the basic auto insurance policy.

Aaron Sutherland, Pacific vice president for the Insurance Bureau of Canada (IBC), says British Columbia has adopted a similar auto insurance model for ride-hailing as other provinces. However, he says motorists are likely to be hampered because they will not be able to shop around for coverage. Instead, they must buy the compulsory protection through the ICBC.

“In other provinces, the governments and regulators set out and mandate what type of insurance has to be purchased by ridesharing operators and then the ridesharing firms can shop around the different insurance providers to find the best product, at the best price, which meets those government mandates,” said Sutherland. “In BC, they’re only going to have one choice – the ICBC. At the IBC, we think all drivers (everyday drivers and ridesharing drivers) should have a choice and should be able to shop around for savings and for products that best meet their needs.”

Details of the ICBC rideshare coverage shows the plan includes 10-years of rate increases between Sept. 16, 2019 and Sept. 01, 2028. Those increases are part of the insurer’s plan to salvage itself following massive losses in recent years.

“When you actually dive into the regulations, the effective rate they’re going to charge per kilometre for ridesharing drivers in BC is going to increase each and every year until 2028,” Sutherland told Insurance Business while re-iterating the IBC’s stance that the private market could ease the situation in B.C.

“It’s always a concern that tax-payers might be left on the hook because of the challenges in BC’s auto insurance system. As there is a real risk to taxpayers should ICBC ultimately lose money insuring the ridesharing industry, it begs the question as to why ICBC is the one providing this coverage as opposed to the private sector, as is done in virtually every other city with ridesharing services.”