Although regulated on both the federal and provincial level, the life and property and casualty (including automobile) insurance business in Canada is an almost exclusively private, for-profit affair. The market is comprised of about thirty insurers of various sizes, each competing for Canadians’ business. All operate as for-profit companies, passing along net revenues to their investors and shareholders.
There are, however, some noteworthy exceptions. In several Canadian provinces, basic compulsory automobile liability coverage is provided by the government through a provincial crown corporation. Only one, however – the Insurance Corporation of British Columbia – is organized as a for-profit company. The ICBC’s recently publicized financial problems have been blamed in part on this unique structure and have raised renewed calls for privatization of the automobile insurance business in B.C.
A Unique Enterprise
The ICBC was created by the B.C. government in the early 1970s. Its original role was both narrow and clear: to provide universally available and affordable automobile insurance in British Columbia. This result was thought to be achievable because of the ICBC’s not-for-profit status.
In 2010, however, the B.C. legislature converted the ICBC to a for-profit enterprise and imposed substantial dividend payment obligations to the B.C. treasury. ICBC thereby became the only for-profit public automobile insurance carrier in Canada. In addition to profitability pressures, various functions typically performed by a government agency have also become ICBC’s responsibility. These include operator licensing, vehicle registration and a number of road safety initiatives. Finally, the ICBC says the number of accidents and resulting claims have continued to rise more quickly that premium increases.
The cumulative result of these pressures is the current financial crisis at the ICBC. Without reforms, the ICBC contends that its losses for 2017-2018 will exceed $1 billion. Without reforms, B.C. drivers could face substantial premium increases.
Reforms Are Likely
While outright privatization of auto insurance appears unlikely, a package of legislative reform measures expected to take effect in 2019 is in the works. The legislature and ICBC executives project that the combined effect will be $1 billion in annual savings.
Among the most publicized reforms is a cap of $5,500 on pain and suffering damage awards for “minor” injuries and resolving disputes regarding what is considered minor through an independent dispute resolution process rather than in the courts. The $5,500 cap will not apply to claims for lost wages, medical expenses or legal fees.
Not all the reforms will reduce or limit benefits, however. Among the changes are the first increases in 25 years in:
- The overall limit on medical expense and wage claims, from $150,000 to $300,000
- The maximum weekly wage loss benefits, from $300 to $740
- Homemaking benefits, from $145 to $280 per week
- Funeral expense payments, from $2,500 to $7,500, and death benefits, to $30,000 from their current $17,580-$20,080 range
The ICBC has said that it is also working with the provincial government to explore revisions to rates. Some of the potential changes, such as charging more for higher-risk drivers and rewarding those with good driving records, have been standard for many years in the private sector.
The personal injury lawyers at Diamond and Diamond have years of experience handling ICBC claims. Consult the skilled personal injury lawyers at Diamond and Diamond to help you receive the settlement you deserve by contacting our 24/7 injury hotline at 1-800-567-HURT or by visiting our website to speak to someone now about your claim. Consultations are free and we have offices located throughout British Columbia.