Accidents up, payouts down 30% since ICBC brought in Enhanced Care: IBC

Nov 3 2022, 9:39 pm

A new report from the Insurance Bureau of Canada (IBC) says that while accidents are up since Enhanced Care was brought in, operating expenses at ICBC exceeded what it provided in injury claims by $173 million in 2021/2022.

ICBC says that IBC’s report, which suggests that seriously injured people aren’t getting the recovery benefits they deserve, is misleading.

Meanwhile, IBC says it’s merely pointing to ICBC’s financials in the report.

“The reduction in care and recovery benefits illustrates the painful truth about ICBC’s no-fault model, and those injured are suffering the consequences,” said Aaron Sutherland, vice president of Pacific and Western for IBC, in a statement.

Much of the data in IBC’s report came from the 2021/22 Annual Service Plan Report from ICBC. IBC says that the switch to the new system allowed ICBC to reduce what it provides to accident victims by 30%, even though collisions were up significantly over that period of time.

“We think this shows that, rather than looking inward to find savings, ICBC is balancing its books on the backs of accident victims,” said Sutherland.

“Now, more than ever, drivers need a choice to ensure they are receiving the best insurance at the best price possible.”

icbc insurance benefits

IBC

“ICBC’s dramatic reduction in claims costs calls that key tenet of insurance into
question. Rather than focusing on improving its own internal operations to find efficiencies and savings for drivers, it appears that ICBC is balancing its books by reducing what it provides to those injured in collisions,” Sutherland added.

IBC’s report suggests that ICBC paid out $2.1 billion in injury claims in 2020/21. IBC adds that in the first year of no-fault, claims paid fell to $1.48 billion.

Most insurers across Canadian provinces are private, but in BC, Manitoba and Saskatchewan, it’s public, meaning that in these provinces, drivers don’t have a choice and thereby the opportunity to shop around for cheaper rates. This reality sparked lots of debate over insurance in BC over the previous few years as the province attempted to extinguish the ICBC “dumpster fire.”

The IBC was one of the agencies calling for the privatization of insurance in BC.

ICBC responds to IBC’s “misleading” claims

Aside from calling the IBC claims misleading, ICBC provided Daily Hive with a thorough response, with some more numbers.

ICBC states that under Enhanced Care, money spent on legal costs decreased dramatically and that “while ICBC’s claims costs also decreased, more money went toward care and recovery benefits than under that litigation-based model.”

According to ICBC, “In the first year under Enhanced Care, 95% of claims costs went to customers while in the previous year under the old system, roughly 80% went to customers due to high legal costs.”

“IBC is choosing to mislead British Columbians by looking at a single year of claims benefits paid, versus those paid over a lifetime — which is far greater than in the previous system.”

ICBC states that it has the lowest expense ratios in the industry, “especially in contrast to those represented by IBC.”

“Government and ICBC were clear that with Enhanced Care, drivers would pay less for auto insurance and more money would go directly toward care, recovery and income replacement benefits than under the old litigation-based system, and that is exactly what has happened.”

ICBC insists that the reality is that auto insurance costs in BC are among the lowest in Canada, both for individuals and businesses.

“ICBC has been very clear that the biggest reason for the reduction in claims payments was the reduction in the cost of litigation where claimants were handing over up to 33% of their settlements to their lawyer.”

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