'ICBC needs competition'

Ahead of ICBC's new risk model rollout next month, private insurers are insisting that more competition is needed in the automobile insurance market to drive premiums down to a level comparable with other provinces.

“We’re seeing study after study that shows that not only do British Columbians pay more [than residents of other provinces] but the ICBC monopoly is more expensive for them,” said Aaron Sutherland, vice-president for the Pacific region at the Insurance Bureau of Canada.

According to an IBC report, which used the latest available data from the General Insurance Statistical Agency, drivers in B.C. pay the highest auto insurance prices in the country, with an average annual premium of $1,680 — about 63 per cent higher than the national average.

These higher prices aren’t going unnoticed by B.C. residents. A recent national survey commissioned by Belairdirect found that 34 per cent of B.C. respondents said they are concerned with the price of their car insurance policy — more than in any other region in Canada. And 61 per cent of respondents said they strongly agree that they pay too much for their auto insurance, compared with 38 per cent for the rest of the country.

“We’re addressing the challenges within our current auto insurance system with the biggest reforms in B.C.’s history, which are already being instituted this year,” ICBC spokeswoman Jo-anna Linsangan said.

“And starting this September, auto insurance will be much more customized so that lower-risk drivers will pay less than higher-risk drivers. In fact, we anticipate more than 55 per cent of our full-coverage customers will be paying less than they do today.”

ICBC’s new risk model would shift the province’s basic auto insurance to a driver-based system, tying at-fault crash histories to drivers instead of vehicle owners. Premium reductions would be offered to drivers with less risky patterns of behaviour, as well as discounts for those driving vehicles with safety features like automatic braking systems.

However, IBC maintains that increased competition from private insurers would be required to turn the tide. A study commissioned by the organization and conducted by consulting firm MNP estimated that opening up the B.C. insurance market to increased competition would reduce premiums for around 60 per cent of drivers, with annual savings of up to $325.

Private insurers also say the limited amount of competition in the optional insurance space  isn’t allowing the industry to thrive and offer consumers better products.

“In theory, there’s competition here in British Columbia — the private sector is allowed to sell optional coverages,” said Colin Brown of Stratford Underwriting and ICBC’s former chief underwriter.

“But the reality is that even after that’s been in place for well over 30 years, the optional coverage is only 10 per cent with the private sector and still 90 per cent with ICBC.”