ICBC's no-fault regime led to "dramatic reduction" in recovery benefits

A new report by the Insurance Bureau of Canada (IBC) investigates the first year of the Insurance Corporation of British Columbia (ICBC)’s “Enhanced Care” no-fault regime – and the results suggest that the switch did more harm than help.

According to the report, ICBC’s operating expenses exceeded what it had provided in injury claims by $173 million. The insurer’s operating expenses in 2021/22 stood at $1.62 billion, but it paid $1.48 billion in injury claims during the same period. By comparison, ICBC paid out $2.11 billion in injury claims in 2020/21, before the no-fault regime was implemented.

ICBC’s year-end financials indicated that the switch to a pure no-fault system allowed it to reduce what it provides to accident victims by 30%. But it was also noted that the number of collisions during the same period were significantly up; there was a 15% increase in collisions from 2020’s 225,000 to 2021’s 260,000.

“The purpose of auto insurance is to ensure that people get the benefits they need to recover from injuries sustained in an accident,” said IBC Pacific and Western vice president Aaron Sutherland. “ICBC’s dramatic reduction in claims costs calls that key tenet of insurance into question.”

Sutherland added that “rather than focusing on improving its own internal operations to find efficiencies and savings for drivers,” it would seem that ICBC is instead “balancing its books by reducing what it provides to those injured in collisions.”

IBC stated in a release that over the past year, there has been a constant stream of media coverage on the predicament of those injured in auto accidents in BC, and how the new no-fault regime has hurt their chances of receiving the appropriate benefits. The bureau also underlined that the issues surrounding the new system strengthen the argument that drivers deserve a choice and the ability to shop for the right auto insurance policy.

Read more: Civil claim filed against ICBC’s no-fault insurance system

“This reduction in care and recovery benefits illustrates the painful truth about ICBC’s no-fault model, and those injured are suffering the consequences,” said Sutherland. “Now, more than ever, drivers need a choice to ensure they are receiving the best insurance at the best price possible.”