Insurance brokers criticize the BC report, claiming that the province’s auto insurance is among the lowest in Canada

A report recently released by a Crown company in BC, comparing how auto insurance rates are more expensive in almost every province than in British Columbia, has been criticized.

The report, commissioned by the Insurance Corporation of British Columbia (ICBC) and conducted by international accounting firm Ernst & Young (EY), was released by ICBC on December 8 and states that “BC drivers with the lowest auto insurance rates in Pay Canada.”

The report compared rates in nine provinces and examined 30 different driver profiles based on a range of criteria including age, gender, marital status, employment status, years of registration, vehicle, average daily commute and annual miles driven – with the exception of Quebec.

Less than a week after the report was released, two insurance agencies issued press statements questioning the validity of the results.

The Insurance Brokers Association of Alberta (IBAA) argued that the EY report’s methodology has “several key flaws” and “should be read with a healthy dose of skepticism.”

“We have serious concerns that the methodology used paints a distorted picture of the auto insurance market in Alberta and presents misleading results regarding the prices paid by drivers,” IBAA said December 13.

According to the EY report, rates in Alberta are among the highest in the country compared to other provinces.

“Not realistic or accurate representation”

The IBAA claimed EY did not present the lowest bid when it reported the fares drivers were said to be paying.

“Instead, they dropped the lowest bid and took the ‘average’ of the higher prices they were getting for the same coverage level,” the nonprofit trade association said.

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“This is not a realistic or accurate representation of consumer purchasing habits. Insurance brokers do not select the ‘average’ of higher prices, but the best price for the best insurance.”

The statement added that EY’s report rejected all discounts offered in Alberta, further inflating the stated premiums.

The association, which represents approximately 260 individual brokerage firms with offices in Alberta, Yukon, the Northwest Territories and Nunavut, gave an example of how brokers work with their clients to determine the lowest possible rates while ensuring full coverage.

“For example, bundling home and property insurance can entitle customers to a discount of up to 20 percent from many private insurers, while public insurers don’t have to compete for business so they don’t offer those discounts,” the agency said.

In addition, IBAA found that the listings referenced in the report were created through an online listing portal and did not utilize the efforts of a licensed insurance broker. “Using a broker would [typically] provide additional and cheaper offers,” it said.

“Results cannot be validated”

The Insurance Bureau of Canada (IBC), a national industry body representing Canada’s personal home, auto and business insurers, claimed that the EY report did not consider “substantial differences” in coverage levels between BC and Alberta’s auto insurance policies.

“Under the Crown insurer’s no-fault insurance model, there are severe limitations on compensation payments and no ability for drivers to take legal action for additional compensation,” IBC said Dec. 14.

“This is very different from the auto insurance market in Alberta, where drivers can sue for additional compensation.”

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The IBC criticized EY’s findings, saying it didn’t use data for auto insurance premiums and claims from the General Insurance Statistical Agency (GISA), a statistical agency for nine participating insurance regulators across Canada.

“The data from GISA were not used in this report and therefore the results from EY cannot be validated,” it said.

The IBC statement also said that Quebec, whose information is needed for comparison purposes, was not included in the EY report.

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ICBC countered the allegation that Quebec’s information was deliberately omitted. Crown insurer had commissioned EY to conduct the research in both 2021 and 2022 with support from provincial auto insurers in Manitoba and Saskatchewan.

“Quebec was not included in the EY report because detailed Quebec information needed for comparison purposes was not available,” ICBC spokesman Brent Shearer said in an email Dec. 16. “This is clearly stated in both reports.”

In the “Sampling Methods” section of the 2022 report, EY stated that “information at the granular level of detail required for the comparisons was not available for Quebec.”

Shearer also denied claims that the sampling process and methodology were questionable.

“Any suggestion that ICBC is in any way misleading in its presentation of the information is incorrect and unfounded, particularly as the reports were prepared by a third party,” he said.

To derive average prices, Shearer referred to the “Rate Comparisons” section of the EY report.

“In cases where five or more sample bids were obtained for a particular customer profile in a particular city, an average of the second to fourth lowest bids was used for the comparisons,” the report states.

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“This average should reflect the likelihood that a customer purchasing insurance is most likely to choose one of the best rates available.”

The spokesperson claimed that “even if the focus had been on the lowest cost of auto insurance in each city rather than an average, BC cities would still be largely more affordable than comparable cities in Alberta and Ontario.”

“Keeping ourselves and British Columbia residents informed about how our motor insurance rates compare to the rest of Canada is part of ICBC’s commitment to transparency and accountability,” he said.

Isaac Teo

Isaac Teo is a reporter for the Epoch Times in Toronto.

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