Let ICBC face real competition
By Paul Willcocks
VICTORIA - You should be looking for a quick explanation for the government's apparent cold feet on allowing real competition for ICBC.
Because without real competition, you'll never know if you're paying too much for your car insurance.
The Liberals' campaign platform promised "greater competition in auto insurance, to create increased choice and reduce motor vehicle premiums." A reasonable person would expect that meant that ICBC's monopoly on basic insurance coverage would be ended. Private companies would have the chance to compete for your business, offering lower prices or better services or cleverer coverage. That's also completely consistent with the Liberals' stated belief in the effectiveness of competitive markets.
It looks like that won't happen. Finance Minister Gary Collins is responsible for ICBC. He says the "core review" of ICBC should be ready for presentation to the public before year-end.
But Collins isn't sounding like a man in a hurry to end ICBC's monopoly grip on the market. The timing isn't good, he says, because private insurers are having trouble and aren't eager to compete.
That's news to them. The Insurance Bureau of Canada says companies are eager to enter the game here. One company, Pembridge Insurance, has just closed its B.C. office, laying part of the blame on the government's foot-dragging.
They want to compete. The Liberals say they like competition. What's the problem?
Collins offers a clue. This would be a bad time to sell ICBC, he says. Tough times for the industry have depressed the Crown corporation's value.
The Liberals never said anything about selling ICBC during the campaign. But it could be that the core review has suggested a rewarding path to competition. Instead of opening the market, and letting ICBC compete, why not offer ICBC for sale first. It would be still be a competitive market, but the wining bidder - or bidders - would start with a customer base giving them 100 per cent of the market. What's it worth to know you have $2.5 billion in annual premium revenue the day you open your doors?
And if that's the plan, the desire to put things off for a few years makes more sense. A delay could mean a much bigger cash windfall for the government.
That leaves some questions, including whether that approach would really allow competition, or simply exchange a privately owned monopoly for a public one.
And in the meantime, what about us, the drivers who will still be waiting for real competition and choice by the time the next election rolls around?
It doesn't look good. ICBC sailed a 6.6-per-cent rate increase through cabinet one year ago. The corporation just released its third quarter financial results, and is talking about another rate increase this Jan. 1. Claims are costing more, investment income is down, the corporation's own operating costs are down 12 per cent so far this year, and more than 1,000 jobs have been chopped. So it wants more money from customers.
Sounds reasonable, although I've never really looked at ICBC's numbers with as much confidence since the corporation claimed it was on the brink of financial disaster when it wanted to force no-fault insurance on us, then miraculously recovered once the battle was lost.
But the Liberals haven't yet set up an independent rate review process. Instead, this proposal will head back to cabinet, a process that Forest Minister Mike de Jong complained last year "defies logic."
Twelve months on, and things aren't any more logical. And it's no clearer when - or if - British Columbians will get a free insurance market.
Footnote: One reason claims are up, says ICBC, is that crashes are happening at higher speeds. That raises interesting questions about the Liberals' decision to kill photo radar, the most likely explanation for the increased speeds and higher costs.
Paul Willcocks can be reached at email@example.com