January 28, 2020 (VANCOUVER) – 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.
Backgrounder