Road Rage

Gordon Campbell’s Liberal Party in 2001 formed the government in British Columbia on a platform that included increasing competition in the auto insurance industry. For more than 30 years, the province’s public insurer, the Insurance Corporation of B.C. (ICBC), has dominated the competition. After a lengthy review, the government did make some changes to increase private competition on optional (or “collision”) auto coverage and to depoliticize decisions on the basic (or “comprehensive”) coverage. The government still has a monopoly over basic coverage, but legislative changes have brought it under the mandate of the B.C. Utilities Commission. There was peace and contentment throughout the land, as the government was seen to be following through on its commitment to stay out of ICBC’s way and let it operate like an insurance company.

But even this government, like so many before it, eventually succumbed to the irresistible temptation to use ICBC, with its formidable reach and clout – and its private-sector distribution force – to achieve other, non-insurance, ends. And the result might have the effect of putting the province’s brokers in harm’s way.

BILL 33: BREAKING BAD NEWS

On May 16, 2007, the provincial government passed Bill 33, the innocuously named Attorney General Statutes Amendment Act, 2007, with very little debate. The statute strengthens the measures available to the Family Maintenance Enforcement Program (FMEP) to collect from its debtors; specifically, it directs ICBC to cancel driver’s licenses and to refuse to issue (RTI) vehicle licensing. Since vehicle licensing is tied to insurance in B.C., this means the only insurance options Autoplan brokers will be able to offer drivers with the RTI notice on their file will be a 15-day temporary operating permit or a storage policy.

Customers sometimes grumble about having to buy auto insurance, but they can get downright cranky when they’re refused. Those who are on the FMEP’s radar are already likely to have emotions under the surface related to complicated and unresolved family issues. Mix in the fact that most of these debtors are men, and that most front-counter staff in B.C. brokerages are women, and you have a potential recipe for emotional outbursts and public humiliation. Brokers are worried for their own safety and that of their other customers.

Bill 33 is intended to keep pace with what other provinces, states and countries are doing, so that debtors can’t evade their responsibility by moving to another jurisdiction. It’s also part of a larger initiative to reform the family justice system in B.C. The idea is to make more resources available for families to mediate and settle on workable arrangements at the outset, and then to crack down harder on individuals who default on those arrangements. As laudable as these goals are, brokers are concerned that they could potentially be the first person to deal with defaulters about their arrears on a face-to-face basis.

Some provinces over the past few years have passed legislation that orders the suspension of driver, hunting and fishing licences held by those in arrears. B.C. based its new measures on those that are already in effect in Alberta, where vehicle registration is also suspended or denied to debtors.

The difference is that in Alberta, the driver obtains insurance from a broker and then takes the proof of insurance to a vehicle registry office. Brokers are not involved in refusing to license the vehicle. In B.C., vehicle registration and the sale of compulsory auto insurance is combined at the brokers’ office.

In a news release about Bill 33, the Attorney General’s office said: “The Family Maintenance Enforcement Program (FMEP) will contact parents twice if they are over $3,000 in arrears to advise their vehicle license may be denied if they do not pay, or make arrangements to pay, their maintenance. People denied a license will still be able to purchase a temporary license for up to 15 days, but it’s a costly option compared to annual renewal.”

Presumably, instead of sending a standard notice to renew, ICBC would also send a letter to the debtor explaining that it has been ordered to deny the driver’s and/or vehicle license. Will three letters be enough? Customers often come in with their notice-to-renew envelopes still unopened.

The 70 or so brokers in the province who are also appointed agents of the Driver’s Licensing Office already have some experience with denying renewals of driver’s licenses to debtors. They say these individuals tend to be more transient, and therefore their mail doesn’t always catch up with them. Whether these debtors got the memo or not, IBABC chair and appointed agent Doug Guedes says they tend to receive the information from the agent about the FMEP arrears as if they are hearing it for the first time. “It may be for a legitimate reason — they moved and the paperwork didn’t follow them — but they all act surprised.

“So the broker will be breaking the news, or at least will wear the target for apparently breaking the news, in virtually every situation. And this is another service — in which the broker takes five to 10 minutes to explain all the steps the debtor must take, provide contact numbers, calm the person down, etc. — for which we are not remunerated.”

Brokers will not be involved in collecting arrears. They’ll see the refuse-to-issue order on the screen and will advise the customer that the only options are to purchase a 15-day temporary operating permit or a storage policy.

THE NUMBERS

About 225 to 250 vehicles per month will be subject to these new refuse-to-issue orders. These figures could rise. These people will be at risk of losing vehicles if they have leased or have loans against them. Human nature being what it is, some of these people will continue to drive.

There are currently an estimated 1,600 prohibited drivers in the City of Vancouver alone. The Vancouver Police Department announced in late May that it will be going after people who are driving while under suspension. But the police will be concentrating on the most egregious cases where drivers have criminal charges.

IBABC representatives voiced brokers’ concerns directly to B.C. Attorney General Wally Oppal and his senior staff in February, two months before Bill 33 was introduced. But it became increasingly evident that this train had already left the station. What now remains is the drafting of regulations for its implementation. It’s here that brokers still hope to have some influence.

ALTERNATIVES FOR REGULATION

A few options have been suggested. One is that ICBC could establish a 1-800 line with live assistance for debtors about their driver’s license and vehicle license, and the steps they must take. A second is that the FMEP play a more proactive role than just sending letters (B.C. is the only province to have privatized this function; a private company administers the FMEP under contract). Yet another solution is for sheriffs to collect the plates from these vehicles. The bottom line is that debtors should know before they come to the brokers’ office that the only products they will be able to purchase are a15-day operating permit or a storage policy.

“I’m opposed to brokers getting involved in the enforcement of family maintenance,” says Ted Lewis, IBABC president. “I just think it has no place in our business. If the delinquent spouse comes to the counter and is refused insurance, I can see that being a very volatile situation.

“From my office I see plenty of explosive situations at the counter that aren’t anywhere near as emotional as family-maintenance matters.” It has the potential of leading to altercations, in his opinion.

“This amendment [Bill 33] should strictly be handled by ICBC and the Family Maintenance Enforcement Program,” he says. “I’ve heard from brokers who have said: ‘We don’t want to encourage ICBC to get involved with direct sales, but this is something we don’t want to hand le. I say we should let them deal with it.'”

Brokers are voicing their concerns directly to ICBC and government.

Another concern is how slippery this refuse-to-issue slope will be. In an effort to polish the city’s image as the 2010 Olympic Winter Games approach, Vancouver Mayor Sam Sullivan in November 2006 introduced Project Civil City, an initiative to clean up the drug-infested and infamous Downtown Eastside and to address the public drunkenness and rowdiness associated with the downtown nightclub scene and major events. Police and bylaw enforcement officers have been writing tickets for everything from public disorder to riding a bicycle on the sidewalk. Only about 37% of the tickets issued have so far been paid, leading Vancouver city counsellor Kim Capri to float the idea that fines for these civic bylaw offences be collected by brokers before auto insurance can be issued.

It’s worth wondering where all this may be heading, and what role insurance and insurance brokers should play.