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In B.C., public auto insurance and full tort system not just compatible, but essential
By Keri Grenier
March 31 2017 issue

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On behalf of the Trial Lawyers Association of British Columbia (TLABC), I write in response to a Focus opinion piece by Laurelly Dale titled “Looking beyond B.C. tort system: No fault and privatization possible as costs outpace rate increases” in the March 24, 2017, edition of The Lawyers Weekly.

Dale (a former ICBC litigation services manager) suggests that the sky is falling and that privatization or a government bureaucracy no-fault system is the answer. This misunderstands the problem.

B.C. has the best auto insurance system in Canada and three modifications within the system can keep rates low while stabilizing the bottom line.

1) The government has taken $1.2 billion out of ICBC

ICBC would not be in the same financial predicament if the provincial government had not taken $1.2 billion of profit out of ICBC over the last five years.

If ICBC had been a private corporation over those five years, those profits would have gone into insurance company coffers and the province would have had to make up that $1.2 billion from other taxes. Make no mistake; private insurers would not spend their profits on reducing rates or funding health care.

We do not support the government continuing to syphon money out of ICBC. Profits should instead be used to reduce premiums. We applaud Minister Todd Stone’s announcement that the government will not return to this practice in the future.

2) Distracted driving has dramatically increased number of accidents

Dale makes brief mention of distracted driving but seems to imply that it is under control with her comment “distracted driving campaigns have been implemented.” The impact of distracted driving on rates is not unique to B.C. and cannot be overstated. Distracted driving is a public safety epidemic that has surpassed impaired driving as the leading cause of motor vehicle accident deaths in B.C.   

Drunk driving rates have been significantly curbed as a result of stiff penalties and social stigma that says it is not okay to drink and drive. But while most people would not even think of driving while drunk, the sheer number of people staring into their laps while driving is frightening. Stiffer penalties and social stigma must be brought to bear on distracted driving. Lives are at stake. TLABC is committed to working toward that goal.  

3) Mismanagement at ICBC

Over the past decade, ICBC mismanagement has resulted in losses of hundreds of millions of dollars. This mismanagement includes terminating hundreds of qualified front-line adjusters (which Dale commends ICBC for as a “cost cutting” measure in 2012). It includes terminating ICBC’s rehabilitation department. It includes a multi-hundred million dollar file management system that has been an utter failure. And it includes pursuing an aggressive American style approach to litigation, forgoing dispute resolution and mediation processes and employing a strategy of delay thereby prolonging the litigation process and causing hundreds of millions of unnecessary legal and expert expenses.

We are hopeful that recent changes at ICBC will stem the bleeding.

What is the answer?

Dale suggests privatization or a bureaucratic no-fault scheme is the answer. But these systems have failed to bring down costs while providing greater protection to citizens. Interestingly, neither one of these systems has received recent support by the Liberals or the NDP. Under the current Liberal government Stone has stated: “it is the government’s intention to maintain public ownership of ICBC, and to work within the current model in order to keep basic automotive insurance as affordable as possible for British Columbians.” Adrian Dix has gone on record with TLABC to say that the NDP will say “no to no-fault and the like.” This is hardly in line with Dale’s comment that “the current auto insurance tort system in B.C. will soon go the way of the woolly mammoth.”

With respect to privatization, Dale’s statement that “[r]esidents of B.C. are paying some of the highest premiums in Canada” is incorrect. To the contrary, and further to a study Deloitte prepared for MPIC’s 2016 Rate Application, auto insurance costs for B.C. drivers rank as the third lowest next to Saskatchewan and Manitoba.

Dale offers Ontario as an alternative for B.C. drivers, as “guidance for what works.”  She notes that Ontario operates a private insurance and no-fault scheme. Ontario made a choice to follow the insurance industry talk.   

As a result, Ontario has the most expensive auto insurance in Canada — more than 300 per cent higher than B.C.  According to the Insurance Bureau of Canada, fraud has “plagued” the Ontario auto insurance system costing as much as $1.6 billion annually.

Steps must be taken to curb and, ideally, reverse ICBC rate increases. The answer is not further bureaucracy or privatization.

In conclusion, the sky is not falling. When interest rates go up, insurers including ICBC will return to the black. Technology is already ushering in a new generation of vehicles that will not rear-end each other or allow drivers to carelessly drift into other lanes. Coupled with the changes discussed above, ICBC will be stabilized and rates will come down while providing British Columbians far better protection than other Canadians when the worst happens and they are disabled as a result of a motor vehicle accident.

For more than 40 years, B.C. has demonstrated that public automobile insurance and a robust, fair tort system are not just compatible, they are each essential components of the B.C. model.   It is a model which ensures that B.C. drivers are able to buy affordable insurance coverage. It is a model which ensures that bad drivers are not rewarded at the expense of victims and their families. It is a model that allows individuals the opportunity for final determination of their claims by a judge or jury free of political and financial pressures that interfere with decisions in a no-fault system.

Is the B.C. model perfect? No. Like public health care in Canada, no system is perfect. As Winston Churchill said of democracy, the B.C. model is perhaps the worst form of an insurance model, except for all the others that have been tried.

Yes, there is always talk in insurance circles about introducing no-fault or privatization. Bear in mind that this talk will never go away because insurance companies stand to make huge profits off B.C. drivers but not because they hope to help the citizens of B.C.

TLABC supports and promotes the rights of individuals in British Columbia. Working together, ICBC, government, B.C. drivers and other stakeholders can fix the challenges facing ICBC without taking the extreme step of stripping British Columbians of their rights, and parroting the failed and expensive schemes pushed on other provinces by the insurance lobby.

Keri Grenier is the president of the Trial Lawyers Association of British Columbia.

Click here to see this article in our digital edition (available to subscribers).