Insurance Corporation of British Columbia

History

The original purpose of ICBC was to provide universal and affordable compulsory public auto insurance in British Columbia by operating on a non-profit basis. However, in March 2010, Christy Clark's BC Liberal government announced that it would require ICBC to pay the province dividends totaling some $778 million over three years, thus signaling the end of ICBC's operation as a non-profit Crown corporation, and also making it the only for-profit public auto insurance provider in Canada. These dividends eventually totaled $1.2 billion. This was undone by the NDP government after their victory in the 2017 BC provincial election, who subsequently passed legislation ensuring ICBC's profits remain with the company and cannot be transferred to the provincial government. Since ICBC's creation, its responsibilities have expanded to include driver licensing, vehicle registration, and various road safety initiatives.

When ICBC was established, it initially held a monopoly on all automobile insurance in the province, but in 1977 its enabling legislation was amended to allow private insurers to compete with it in the market for optional (supplemental) insurance (including coverage such as extended liability, collision, and comprehensive plans). ICBC continues to both hold a monopoly on basic insurance and offer optional additional coverage.

Recent history

On November 23, 2016, the provincial government announced that 'luxury' cars (those worth over $150,000) will no longer be insured by ICBC. In 2016, there were approximately 3000 cars in this class insured by ICBC; the government claimed that this change would save approximately $2.3 million per year. High-end car dealers have criticized this change, arguing that it would be better to adjust the rates that these car owners pay rather than ignore an entire segment of vehicles on the road. In 2017, ICBC introduced a modified version of this new system, whereby 'luxury' vehicles could still be insured but would face having to pay higher premiums starting on January 8, 2017. Vehicles in this class may also require an application to "obtain own damage coverage, which includes Collision, Comprehensive, and Specified Perils coverage".

In 2019, ICBC overhauled its rate structure for liability insurance by shifting to a private-sector model where drivers in higher risk categories will pay higher premiums. Then-BC Attorney General David Eby condemned the high rates, stressing the need for price reductions for young drivers, while acknowledging that rates are still subsidized.

In February 2020, the BC provincial government announced that they were switching ICBC from a "litigation based model" to a "no-fault" model. Under this new model "people involved in vehicle crashes can no longer sue for damages except in cases involving court convictions for offences like negligence, street racing, impaired driving, or in cases of faulty manufacturing, botched repairs and the over-service of alcohol by a business".

In February 2021, the BC government announced that BC drivers "will get a one-time cheque averaging $190" due to "An improved financial outlook at ICBC, partially the result of fewer crashes and accident claims during the [COVID-19] pandemic". A second rebate was announced in July 2021, averaging $120 per policy holder.

In March 2022, the BC government announced that ICBC "will provide a one-time relief rebate of $110 to customers to ease the financial burden of increased gas prices caused by the 2022 Russian invasion of Ukraine." The government stated that the funds for the rebates would come from the "net income of $1.9 billion for the fiscal year ending March 31, 2022", with the remainder being "reinvested into ICBC’s capital reserves to ensure rates remain affordable for the long term."

In December 2022, the NDP provincial government announced it had filed an application for there to be no basic insurance rate increases for two years with the BC Utilities Commission, marking 5 years of no basic insurance rate increases.

Operations

ICBC also funds physical rehabilitation services like physiotherapy for individuals injured in motor vehicle accidents. These treatments are typically covered under the Enhanced Care model and delivered through approved clinics across British Columbia.

Governance

ICBC is governed by a board of directors appointed according to the provisions of the Insurance Corporation Act, ICBC's enabling statute. The board of directors, the CEO, and ICBC management govern ICBC in accordance with corporate governance best practices, and in accordance with the provisions of the enabling legislation, the Motor Vehicle Act, other legislation applicable to ICBC, and directives from the provincial Cabinet Committee. Proof of insurance is demonstrated, in part, by the application of a decal to the licence plate. As of May 1, 2022 decals are discontinued and will no longer be issued. This was done as part of the transition to online renewals.

Rates and finances

Like other insurance companies, ICBC bases its premiums on a client's claims history, type of automobile, geographic location, and years of driving experience. The Corporation assigns each driver a "driver factor" number for each type of insurance offered. This driver factor determines the discount/surcharge the customer pays for each type of insurance, with lower driver factors meaning lower premiums and lower risk.

Rates applicable to ICBC's basic automobile insurance coverage are subject to the review of, and are set by, the BCUC. In practice, however, the Cabinet of the provincial government controls ICBC's rate setting through its power to set target financial outcomes (such as capital reserve ratios and profits), and through its ability to issue Special Directives to the BCUC.

Revenue collected by the Corporation goes mostly towards paying insurance benefits and operational costs. The remainder is devoted to fulfilling ICBC's mandate to promote safe driving (the "RoadSense" campaign), as well as various other loss prevention strategies.

ICBC funds services, such as counselling for clients who have been in a car accident or who have had a family member pass due to a car accident.

References

References

1. "Insurance Corporation of British Columbia 2020/21 ANNUAL SERVICE PLAN REPORT".
2. "ICBC 2010 Annual Report".
3. Premier Dave Barrett: "Government-owned automobile insurance represents an opportunity for the people of British Columbia who use their automobiles as a utility to have the right to decent automobile insurance protection at no-profit rates." ([https://www.leg.bc.ca/documents-data/debate-transcripts/30th-parliament/2nd-session/30p_02s_730306p#01022 Hansard: 2nd session, 30th Parliament, Afternoon March 6, 1973, p. 1042])
4. Minister Hanson (the Social Credit minister responsible for ICBC): "The mandate of ICBC, which was established a number of years ago, was to break even… The bottom line is that ICBC is a user-paying, non-profit, break-even corporation. There haven't been great payments to the government out of ICBC. Government has nothing to do with it. It stands on its own. Rates are established for that reason and for actuarial reasons. The bottom line is: break-even and don't end up with a surplus or a deficit." ([https://www.leg.bc.ca/documents-data/debate-transcripts/34th-parliament/2nd-session/34p_02s_880422a Hansard: 2nd Session, 34th Parliament, 22 April 1988])
5. Willcocks, Paul. (March 7, 2010). "Cash grab from ICBC will cost drivers". Times Colonist.
6. There are three other public auto insurers in Canada: [[Manitoba Public Insurance]], [[Saskatchewan Government Insurance]], and the [[Societé de l'assurance automobile du Québec]]. All three are disallowed from remitting profits or dividends to the provincial treasury. See: https://www.mpi.mb.ca/en/PDFs/PolicyGuide2017.pdf {{Webarchive. link. (October 1, 2017 at p. 6; https://www.sgi.sk.ca/about/index.html; and http://legisquebec.gouv.qc.ca/en/showversion/cs/S-11.011?code=se:23&pointInTime=20170620#20170620 at Section 23.)
7. (November 25, 2016). "Government vows to keep hands off ICBC dividends for three years". Vancouver Sun.
8. (2020-03-02). "ICBC profits should not be used to cover other government costs: NDP".
9. McCandless, Richard. (Summer 2013). "Politics and Public Auto Insurance in British Columbia". BC Studies.
10. BC Utilities Commission. (November 12, 2003). "2004 Revenue Requirements Application Decision".
11. McCandless, 102.
12. (November 23, 2016). "ICBC will stop insuring high-end luxury cars".
13. (November 25, 2016). "High-end car dealers not consulted as ICBC says it will stop insuring expensive autos". Vancouver Sun.
14. "Coverage for luxury vehicles".
15. Fletcher, Tom. (October 7, 2019). "Premier John Horgan regrets big ICBC rate hikes for young people".
16. Smyth, Mike. (October 7, 2019). "ICBC sticker shock: Young drivers walloped under new rate system".
17. (February 6, 2020). "B.C. to cut ICBC rates 20 per cent and switch to 'no-fault' insurance". Vancouver Sun.
18. (January 15, 2021). "BCUC approves ICBC basic rate decrease on interim basis". ICBC.
19. (February 2, 2021). "ICBC customers to get an average $190 rebate after $600 million in savings from fewer crashes". Vancouver Sun.
20. (June 11, 2021). "COVID-19: ICBC to issue drivers a second rebate". Vancouver Sun.
21. (March 25, 2022). "ICBC relief rebate coming for drivers". Government of British Columbia.
22. Premier, Office of the. (2022-12-12). "ICBC files for no increase to basic insurance rates for two more years {{!}} BC Gov News".
23. "ICBC Injury Treatment in Abbotsford".
24. BC Utilities Commission, 4-5.