points out, that doesn’t go to care and
The fact that product change has not
visited ICBC in a very long time ought to
be a big tell. While other provinces have
evolved their vehicle insurance regimes
in response to escalating claims costs
and concerns around affordability, B.C.
maintains a litigation-based insurance
model, so not-at-fault drivers can sue at-fault drivers for economic loss, and for
pain and suffering, regardless of injury
severity. B.C. is the only province not to
have modified this adversarial model.
That model has exacerbated the
impact of some nasty underlying trends – problems in and of
While it is true that the number of accidents on B.C. roads
has been rising, more alarming
is that the number of claims
being filed has been rising faster
than the number of accidents.
ICBC data shows that, since
2013, we’re seeing 20,000
more accidents per year in the
province – an increase of 23%
over four years. That’s a serious
problem, given B.C.’s considerable road-safety initiatives and
new vehicle-safety features such
as sophisticated collision avoidance systems.
Vehicle repair costs have risen
nearly a third over the past two
years, partly because of the
greater number of crashes, and
partly because advanced, new
vehicle materials and an array
of onboard technologies drive
higher per-vehicle repair bills.
In addition, the number of
high-value vehicles – those with
a sticker price over $150,000 – has leapt
70% in only four years.
Perhaps the greater cause for concern
is the fact that the rise in number of
claims filed has surpassed the rate of increase in crashes. More claims are being
filed per crash. Perhaps most alarming,
the average settlement for minor injuries
seems to be spinning out of control.
In 2000, an average minor injury claim
paid out $8,220. By 2016, that amount
had ballooned to just over $30,000.
That’s an increase of 265%. That compares to only a 26% increase over the
same period in average settlement for
serious and catastrophic injuries – from
$38,014 in 2000 to $48,078 in 2016.
Of each minor injury claim, the
amount paid out for pain and suffering
has put the hurt on ICBC. From $5,004
in 2000 it has grown to $16,499 in 2016.
Maybe people have just become more
sensitive to discomfort. Or maybe not.
By contrast, the average pain and suf-
fering paid out for a non-minor injury
amounted to $13,789 in 2000 and only
$20,945 in 2016 – a 52% increase com-
pared to 230% in minor injury cases.
Minor injury claim costs, which used to
account for less than a third of all bodily
injury claims costs, now make up 60%
of the total.
The result of these trends: a growing gap between premiums collected
under Basic insurance and claim costs
has reached $560 million at present,
and is projected to climb to $1.1 billion
annually by 2019. Premiums collected,
the second-highest in Canada, are not
high enough to cover the cost of paying
claims. Without action, those already
lofty premiums could rise by 30%.
The rate-smoothing and government
intervention required thus far to protect
B.C. drivers from a 15 to 20% rate in-
crease today has eroded ICBC’s financial
condition to the point that EY Consult-
ants call “unsustainable.”
According to the July report, “The
average driver in B.C. may need to pay
almost $2,000 annual total premiums for
auto insurance by 2019, an increase of
30% over today’s rates, assuming a) cur-
rent trends persist, b) the objective is to
have ICBC’s rates cover its costs, and c)
significant reform is not undertaken.”
“There is no indication that the un-
derlying issues will correct themselves,”
The EY report identifies three general
areas of opportunity for reform.
First, it calls for an improvement in
the effectiveness of B.C.’s road-safety
approach, and states that changing
high-risk driver behaviours will result in
fewer accidents on B.C.’s roads.
Next, and most critically, a redesign
of the current insurance product is
required. This is where the bulk of the
savings will come from. New
product design would aim to
alter claimant behaviour, reward
safer driving, increase fairness,
and keep costs and premiums
Yet both those measures will
So EY’s third area of opportunity is a set of additional interim
measures that could be initiated
by ICBC in the near term to provide an incremental impact to
the future performance of ICBC
and B.C.’s auto insurance system
and lay a platform to ultimately
enable successful reform.
For example, ICBC could save
up to $250 million annually by
reducing high-risk driver behav-
iour. The provincial government
has already started by going
after what is generally thought
to be a growing problem –
distracted driving. More than
25% of all car crash fatalities
in B.C. occur due to distracted
driving. “More people are now
killed through distracted driving
than through impaired driving. We need
to raise public awareness of that fact,”
In November, the government announced that distracted driving will
now be considered a high-risk behaviour under the ICBC Driver Risk
Premium program. A driver with two
distracted driving tickets in a three-year
period could see their financial penalties rise to $2,000. The higher premiums
are expected to go into effect for distracted driving convictions beginning
March 1, 2018.
Another initiative, recently in the
news, the intersection camera program
will also get a revamp. The 140 cam-
eras deployed at the province’s most
accident-prone intersections only catch
red-light-running drivers for six hours 2 $2,000 is the total consumer spend reflecting true ex-
pected claims costs on Basic and Optional coverages.
The Globe and Mail called Joy MacPhail’s 14 years in politics
“one of B.C.’s most remarkable political careers”. She was
appointed chair of the ICBC Board of Directors in July.