The war of words between British Columbia’s political parties is intensifying with a focus on whether private or public car insurance is best for drivers as the province inches toward an election on October 24.
In what seems to be a long-running debate on which system benefits drivers most – private or public auto insurance – the B.C. government under the New Democratic Party (NDP) appears to be regularly defending the province’s publicly managed vehicle insurance system. First, it exchanged verbal barbs with Alberta on which province’s system produced cheaper car insurance premiums for drivers, and now it’s defending public auto insurance at home.
The NDP’s main rival – the B.C. Liberal Party – is promising to end ICBC’s monopoly and open the market up to competition for all forms of insurance. Whether or not such action would result in lower auto insurance rates for all B.C. drivers remains a hotly contested issue.
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Will B.C.’s voters choose private car insurance?
The Insurance Corporation of British Columbia (ICBC) is that province’s public insurer. Drivers in B.C. can only purchase car insurance from ICBC, which has held a monopoly on basic car insurance for 46 years.
Interestingly, in February, the B.C. government announced an overhaul of the publicly managed vehicle insurance system to reduce premiums and the “financial dumpster fire” – as B.C. Attorney General David Eby calls it – that is ICBC’s taxpayer-backed balance sheet. The NDP’s plan involves what it calls an ‘enhanced care’ system that the government says would save drivers in Canada’s most westerly province an average of 20% on their auto policies once it comes into force in May 2021 – well after the election.
While the ‘private auto insurance is cheaper’ perspective does not always prove to be accurate, drivers in B.C. pay the most for insurance in Canada at an average premium of $1,832. Ontario, which has private insurance, has the second most expensive car insurance premiums in the country at an average rate of $1,505. Quebec, which has a mixed public-private plan, has the lowest average premium at $717.
In its defence of ICBC, the B.C. government points to a 2018 report from the Insurance Bureau of Canada (IBC) suggesting a competitive insurance model would see rates spike by 37% for drivers under the age of 20, while drivers under the age of 35 would see their premiums jump up by 18%.
Meanwhile, IBC recently commented on the topic highlighting the benefits of an open market.
“This would make British Columbia’s no-fault system – set to come into force in May 2021 – remarkably similar to that of Quebec, a province where injury coverages are provided by the government insurer, and vehicle damage coverages are provided by private insurers. Under the Quebec hybrid model, drivers pay an average of $717 for auto insurance – the lowest in Canada – and can shop around to find the best coverage at the best price. That is less than half the $1,500 average premium ICBC projects under its no-fault insurance system,” said Aaron Sutherland, Vice-President Pacific at IBC. “Under ICBC’s monopoly, B.C. drivers pay more for car insurance than any other jurisdiction in Canada. Canada’s private insurers want to help lower premiums in B.C. and are committed to working with any government to create a system that works for everyone.”
Questions remain over ICBC’s future
What hasn’t been discussed publicly to date is how ending the ICBC monopoly might affect the B.C. government’s revenue. The B.C. Liberals also say drivers in B.C. have yet to receive any emergency rebates the NDP promised them because of the COVID-19 pandemic.
No matter how British Columbians vote, inarguably drivers across Canada will be waiting to see if they vote to dump their publicly managed car insurance system and allow private insurance companies to operate there.
