How this public insurer plans to save $1 billion a year

Changes to accident benefits regulations will result in projected net savings of $1 billion annually, British Columbia’s Ministry of Attorney General said Friday.

Changes to Insurance Corporation of British Columbia’s (ICBC) accident benefits will cost an estimated $200 million annually. But this will be offset by an estimated savings of $1.2 billion per year through reduced legal costs, a limit on payouts for pain and suffering for minor injuries and a new dispute resolution model.

The regulations amend the Insurance (Vehicle) Regulation and the Minor Injury Regulation. Among the changes, effective April 1, 2019:

• The overall medical care and recover cost allowance will be doubled to $300,000, retroactive to Jan. 1, 2018
• A new limit of $5,500 on pain and suffering for minor injury claims (the cost of these claims has increased 265% since 2000). As well, there will be treatment protocol guidelines for examination, assessment, diagnosis and treatment of minor injuries to provide more consistent care for people injured in a crash
• Updated treatment fees and types of treatments covered by ICBC, such as acupuncture and counselling, for both new and existing claims
• More than doubling wage loss benefits for those injured and unable to work, from a maximum of $300 per week to $740 a week.

“These changes will be in effect for any new claims that occur on or after April 1, 2019, and will make ICBC’s accident benefits among the most generous of tort systems across Canada,” an ICBC spokesperson said Tuesday.

“The regulations announced by government will help to create a more sustainable auto insurance system in B.C. and provide increased care for anyone injured in a crash,” added Nicolas Jimenez, president and CEO of ICBC. “B.C. is the last province in Canada to introduce some form of restriction on minor injury payments – other provinces have made changes which have helped lower claims costs and insurance rates, while improving care for the injured.”

The Insurance Brokers Association of British Columbia (IBABC) could not immediately be reached for comment on the changes. But the association and its members are working behind the scenes with ICBC on broker training needs, IBABC executive director and chief operating officer Chuck Byrne told Canadian Underwriter in late October. Brokers were also identifying short- and medium-term consumer education elements, as well as some of the implementation fine points.

In August, ICBC proposed a major shake-up of its auto insurance rating system, introducing a “fair rate” system that would have higher risk drivers paying higher premiums than lower risk drivers. Changes included at-fault crashes following the driver, not the vehicle owner; recognizing up to 40 years of driving experience; and a 10% discount on vehicles driven less than 5,000 kilometres a year.

“I hear positive reaction to the 5,000 kilometre discount,” Mike Dakin, compliance manager for InsureBC Group, a group of general insurance brokerages, said in September.

The BC Utilities Commission (BCUC) will also be conducting a review on ICBC’s rate filing in December. “Despite the product reforms, and re-slicing of the revenue pie via the rate design changes, ICBC will still need rate increases and that will be the element dealt with in December when they file at BCUC,” Byrne said.

In January of this year, BCUC approved a 6.4% increase to ICBC’s basic insurance rate for the policy year commencing Nov. 1, 2017.