New Auto Insurance System, Same Old Story: BC Drivers Pay Much More than Alberta Drivers

VANCOUVER, Jan. 28, 2020 /CNW/ - Auto insurance in British Columbia (BC) and Alberta is substantially the same, according to a new report from accounting firm MNP. The price drivers are paying, however, is very different.

In the study, MNP found that BC drivers are paying up to 42% more for their auto insurance than their neighbours in Alberta pay for similar coverage. A key difference between the two provinces is that Insurance Corporation of British Columbia (ICBC), a Crown corporation, has a monopoly on mandatory auto insurance in BC, while in Alberta, drivers have choice.

BC's and Alberta's auto insurance systems have the following similarities: 

• Tort-based systems with the ability to sue for pain and suffering
• A similar limit on pain and suffering awards for minor injury claimants
• Similar mandatory coverages
• Similar average payouts for injury claims: $50,658 in BC and $46,082 in Alberta.

MNP's study obtained quotes through insurance brokers in each province, as well as online, for 14 different drivers. They then compared the price of auto insurance for the same drivers, with the same vehicles, and at the same coverage levels, in comparable locations across both provinces. For example, a 49-year-old small business owner in Surrey who drives a 2014 Ford F-150 would pay $1,953 with ICBC, which is $573 more than what the same individual would pay in Calgary.

Similarly, MNP has found that inexperienced drivers in BC are paying far more than the same drivers in Alberta for comparable coverage. A new driver with two years of experience would pay ICBC $4,319 to insure their 2008 Honda Civic to go to and from school (less than 15 km). That is $828 more than the same driver would pay in Calgary.

This report directly contradicts ICBC's recent suggestions that drivers in BC pay less than drivers in other provinces. BC drivers pay the highest auto insurance prices in Canada, with annual premiums averaging $1,832. This is far higher than premiums in Ontario, Alberta and Atlantic Canada according to data from the General Insurance Statistical Agency (a statistical agency created and overseen by provincial insurance regulators).

Auto insurance in Alberta is by no means perfect and, like in BC, is in need of reform. In August, the Alberta government removed limits on rate increases in that province, and since that time companies in Alberta have applied for – and received – rate increases averaging 10.5%. These increases are included in the quotes MNP used in their analysis. In comparison, BC drivers will find out what ICBC's next rate increase is when it is announced in February.

For more information on the study and to see the driver profile comparisons, visit betterautoinsurancebc.ca.

Quotes:

"The auto insurance systems in BC and Alberta are substantially similar, with a key difference being who sells auto insurance in each province. That difference has contributed to drivers in BC paying more than their neighbours in Alberta for similar coverage," said Susan Mowbray, Senior Economist, MNP 

"This study gives an apples-to-apples comparison of the price drivers are paying for similar auto insurance coverage in BC and Alberta, and clearly demonstrates the price impact of ICBC's monopoly," said Aaron Sutherland, Vice-President, Pacific, IBC. "ICBC has suggested that no private insurer could come into BC and offer the rates they offer in Alberta. If ICBC is so sure of that statement, it's time they opened themselves up to competition to prove it," added Sutherland.

About Insurance Bureau of Canada

Insurance Bureau of Canada (IBC) is the national industry association representing Canada's private home, auto and business insurers. Its member companies make up 90% of the property and casualty (P&C) insurance market in Canada. For more than 50 years, IBC has worked with governments across the country to help make affordable home, auto and business insurance available for all Canadians. IBC supports the vision of consumers and governments trusting, valuing and supporting the private P&C insurance industry. It champions key issues and helps educate consumers on how best to protect their homes, cars, businesses and properties.

P&C insurance touches the lives of nearly every Canadian and plays a critical role in keeping businesses safe and the Canadian economy strong. It employs more than 128,000 Canadians, pays $9.4 billion in taxes and has a total premium base of $59.6 billion.

For media releases and more information, visit IBC's Media Centre at www.ibc.ca. Follow us on Twitter @IBC_Pacific or like us on Facebook. If you have a question about home, auto or business insurance, contact IBC's Consumer Information Centre at 1-844-2ask-IBC.

BACKGROUNDER
Comparing BC and Alberta Premiums: January 2020

To ensure an accurate comparison of premiums, MNP gathered quotes for 14 different drivers through an insurance broker in each province, as well as online in Alberta, using the same vehicles, and at the same coverage levels, in comparable locations across both provinces. MNP compared ICBC's prices in British Columbia to the lowest Alberta quotes for each driver.

Coverage levels purchased are the same in each province and include:

• $1 million in third-party liability
• Collision coverage with a $500 deductible
• Comprehensive coverage with a $300 deductible for BC and a $250 deductible for Alberta 
• Uninsured motorist protection

A Detailed Comparison of BC and Alberta Premiums

Driver Profiles	British Columbia		Alberta
	Location	ICBC Premium January 2020	Location	Premium January 2020
Experienced Drivers Without At-fault Accidents
Small-Business Owner	Surrey	$1,953	Calgary	$1,380
Family	Langley	$1,985	Calgary Area	$1,516
Young Parents	Vancouver	$1,967	Calgary	$1,500
Seniors	North Vancouver	$1,417	Calgary Area	$1,130
Single Individual	Kelowna	$1,499	Red Deer	$1,448
Inexperienced Drivers
New Driver (City)	Burnaby	$4,319	Calgary	$3,491
New Driver (Rural)	Kamloops	$3,194	Medicine Hat	$2,393
Young Driver	Prince George	$1,757	Fort McMurray	$1,340
Experienced Drivers with One At-fault Accident
Driver with an Accident	Surrey	$2,805	Calgary	$3,090
Multiple Drivers with Different Risk Profiles
Family with New Driver (City)	Richmond	$2,540	Edmonton	$2,398
Family with New Driver (Rural)	Kelowna	$1,956	Red Deer	$1,835
Recreational Vehicles and Motorcycles
Luxury Car	Burnaby	$2,394	Calgary	$1,730
Recreational Vehicle	Victoria	$1,036	Edmonton	$590
Motorcycle	Fraser Valley	$1,908	St. Albert	$1,806

Note: MNP obtained the quotes in January 2020.
The Alberta government recently removed the cap on rate increases in that province, and since then companies in Alberta have applied for – and received – rate increases averaging 10.5%. These increases are included in the quotes MNP used in their analysis. Prices shown do not include ICBC's 2020 rate increase, expected to be announced by February 16.

SOURCE Insurance Bureau of Canada

Media Contact: Vanessa Barrasa, Manager, Media Relations, 416-550-9062, [email protected]

Related Links

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