There is such a thing as a public auto-insurance monopoly that isn’t poised on the brink of financial ruin and generating headlines about political crises and threats of massive rate hikes.
Manitoba has one. It has had its financial problems in the recent past, but they are nowhere near the scale of ICBC’s current crisis. B.C. looks to be committed to staying with the public model. If the B.C. Liberals couldn’t bring themselves to go back to private insurance, there’s no way the NDP would.
So the Manitoba model is worth at least a glance. The consulting firm Ernst and Young (EY) touched on it in the review of options it presented to government last July. One of the observations was that most jurisdictions have made major changes over the years to ease the pressure on rates. But B.C. has maintained essentially the same auto-insurance scheme since an NDP government created it in 1973.
Behind all the finger-pointing about B.C. Liberal chicanery in trying to ignore and hide ICBC’s problems, there is one point of political agreement now — there have to be fundamental changes to the business model. One of the biggest would be to modify the litigation-based model that has been in use since the start. It means the blameless driver is free to sue the at-fault driver in a crash for economic loss and pain and suffering arising from any and all injuries.
That’s the main reason why 24 per cent of ICBC’s costs in 2016 were legal bills.
The EY report said: “All other Canadian jurisdictions have modified their insurance schemes over the past 20 years.” But B.C. stood pat while all the negative trend lines (accidents, settlements, legal costs) rose. So the new projected $1.3-billion deficit at ICBC is a structural problem.
Modifying the system to curb expensive court cases frightens politicians because it entails a pitched battle with lawyers. But Attorney General David Eby has cited more than once the idea of capping payouts for minor injuries.
The EY review says: “Every province that has moved away from unrestricted litigation-based models has done so in an effort to control escalating minor bodily injury costs. The scene being set in B.C. is no different.”
The review cited the “care-based model” in Manitoba. Crash victims get ongoing comprehensive benefits without having to fight in court. There are two levels of appeal for disputes. The trade-off is their right to sue for more economic loss is curtailed, and pain and suffering are not recognized.
Manitoba Public Insurance released its third-quarter results about the same time ICBC did, and won the comparison on all counts. It made $60 million. ICBC lost $900 million. Manitoba held a rate hike to 3.7 per cent. ICBC imposed an eight per cent hike.
Next year’s will be 2.6 per cent in Manitoba, and it’s only the fourth hike in 15 years. B.C.’s will be at least twice that.
Manitoba says premiums have risen 24 per cent there since 2001, and B.C.’s have gone up 59 per cent.
There’s one big difference. Manitoba had one of the safest years on the roads since 1982. Fatalities were the second-lowest. And collision claims last month were 14 per cent lower than December a year ago.
Just So You Know: There are lots of anecdotes about how high ICBC premiums are compared with elsewhere, but here’s my comparison with Manitoba, for a 10-year-old base-model SUV.
ICBC charged $1,053 for basic, then knocked 43 per cent off, based on the driving record. Third-party liability — $128, collision — $101, comprehensive — $40. Another $61 for the licence fee put my bill at $930 last spring.
The comparable Manitoba estimate, provided by an online calculator and confirmed by Manitoba Public Insurance staff, was $793 for basic (with a 33 per cent safe-driving discount). Separate charges for other variations, and a $154 registration charge, brought the total to $1,031.
So it’s about $101 cheaper in B.C., if you can put up with all the political drama about how high that will jump.
