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Canada

Don Forgeron: B.C. drivers are paying — literally — for ICBC monopoly

In most provinces, drivers who want to buy auto insurance can choose between competing companies. But in B.C., the choice is between ICBC and a bicycle.

Last week in the Vancouver Sun, the executive director of the Insurance Brokers Association of B.C., Chuck Byrne, expressed his support for the province’s auto insurance monopoly. I admire his passion — but his comparison of auto insurance markets across the country was biased and distorted.

Byrne portrays himself as an unbiased observer. In truth, he represents insurance brokers who receive nearly half-a-billion dollars in ICBC commissions each year — selling a product that drivers effectively have no choice but to purchase.

So let’s be absolutely clear about what ICBC’s monopoly on auto insurance means for B.C. drivers.

It means that British Columbians pay the highest auto insurance premiums in the country. On average, they pay hundreds of dollars more than all other Canadians, and double what those in some provinces pay.

To distract British Columbians from this fact, Byrne chooses to stoke fear. He alleges that drivers elsewhere are frequently denied coverage — and that untold numbers go without insurance. His assertions are baseless. In provinces with competitive markets — like next door in Alberta — any company that seeks to sell auto insurance must, through legislation, provide it to one and all.

Furthermore, Byrne doesn’t want British Columbians to know that despite paying much more for car insurance, they don’t necessarily receive higher benefits. In B.C., the average injury claim is $50,658. In Ontario — with a competitive market — it’s $48,423.

In other words, this monopoly is a lose-lose proposition. It works for Byrne and his brokers, but it doesn’t work for British Columbians. The time has come to put B.C. drivers first and give them real choice.

What benefits would a competitive auto insurance industry offer? First, it would offer more money in your pocket. According to a recent MNP report, drivers could save up to $325 a year.

And it would encourage innovation by introducing new tools and products that better meet drivers’ needs. A monopoly lends itself to the status quo. Competition creates a powerful incentive to deliver the best products at the best prices.

Let’s be clear: Reforming a system of auto insurance is not easy. The B.C. government is to be applauded for its efforts to improve the province’s insurance system. Its new reforms will more accurately price driver risk and encourage better driving behaviours on our roads. That’s something we all want to see.

But the changes won’t lower premiums. In fact, projections show that ICBC’s rates will keep rising — significantly — in the years ahead. To make auto insurance more affordable in B.C., we need real choice and real competition.

Still believe in the wisdom of a monopoly? Consider this: B.C. adopted its public auto insurance system in 1973. How many provinces have followed suit over the past 46 years? None. Zero. Most Canadians have come to recognize that monopolies are a costly relic.

The people of B.C. know it, too. A recent public opinion survey found that four out of five British Columbians want more choice in auto insurance. The desire for change and choice is overwhelming.

Competition means lower rates and better service. It means companies fighting for your business and your loyalty. It means better tools and innovative products.

For too long, B.C. drivers have been forced to pay the price — literally — for the ICBC monopoly. The time has come for real choice, real competition and real change for the benefit of B.C. drivers.

Don Forgeron is president and CEO of the Insurance Bureau of Canada.

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