The British Columbia government is directing changes for the Insurance Corporation of British Columbia (ICBC) to bring about an end to its financial crisis, while keeping rates affordable for B.C. drivers.
Today’s changes come in the wake of a projected 2017-2018 net loss of net loss of $1.3 billion to ICBC.
Taking effect April 1, 2019, the changes include:
- A new limit of $5,500 on pain and suffering for minor injury claims. The cost of those claims has increased 265% since 2000. British Columbia is the last province in Canada to take this kind of action.
- The first major improvements in accident benefits in 25 years, dramatically increasing the care available for anyone injured in a crash, regardless of fault. The overall medical care and recovery cost allowance will be doubled to $300,000. This change will be made retroactive to Jan. 1, 2018, so it will effectively be in place to protect injured drivers and passengers immediately. See more on this benefit below.
- An independent dispute resolution process for certain motor vehicle injury claims.
Together, these changes will reduce the amount ICBC spends on legal fees and expenses, which have grown to consume 24% of ICBC’s budget. The savings from this change, when coupled with other planned initiatives, will restore ICBC to financial sustainability and finance the planned accident benefit improvements.
Disputes over certain motor vehicle injury claims, including the classification of an injury, will be adjudicated by B.C.’s Civil Resolution Tribunal, an independent body that already adjudicates strata and small claims disputes in the province.
ICBC will be consulting with customers on major revisions to the corporation’s rate structure with the goal of ensuring good drivers pay less, and bad drivers pay more. The consultation will ensure rate structure changes are responsive to the interests of British Columbians and done with full transparency.
- Doubling the lifetime allowance for medical care and recovery costs for those catastrophically injured in a car accident from $150,000 to $300,000. Legislation will be introduced with the intention of making this benefit retroactive to Jan. 1, 2018, in order to start immediately helping seriously injured British Columbians.
- Covering a greater variety of treatment services.
- Significantly increasing the amount covered for treatments, so customers don’t have to pay out-of-pocket.
- More than doubling wage loss payments to $740 per week, almost doubling home support benefits to $280 per week, tripling funeral cost coverage to $7,500, and increasing death benefits to $30,000.
- Injury claims totalled $2.7 billion in 2016, an increase of 80% in the last seven years.
- The average claim paid out for minor injuries has risen from $8,200 in the year 2000 to $30,038 in 2016, an increase of 265%.
- At the same time, the average pain and suffering awards paid out for minor injuries have risen from $5,004 in 2000 to more than $16,499 in 2016.
- Vehicle damage claims costs have increased 30% in just two years, to a total of $1.5 billion in 2016 alone.
- Use of the CRT for minor injury dispute resolution means claimants who don’t use a lawyer will get to keep their entire settlement, rather than paying a portion of it to lawyer fees.
- The use of the CRT for these disputes will also reduce ICBC’s legal costs, which account for 24% of the corporation’s total annual costs. These costs are greater than the cost of running ICBC.
Enhanced accident benefits
As of April 1, 2019, everyone injured in a crash will have access to greatly enhanced accident benefits aimed at improving care and support for recovery.
More money for treatments
- The overall allowance for medical care and recovery expenses will double to $300,000, from $150,000, to better support those most catastrophically injured in a crash.
- This includes necessary medical, surgical, dental, nursing or physical therapy services, as well as costs for chiropractic treatment, occupational therapy or speech therapy.
- Legislation will be introduced to make this benefit retroactive so that it will apply to anyone injured in a crash on or after Jan.1, 2018, in order to start helping British Columbians sooner.
- Significantly greater treatment costs will be covered.
- Customers will no longer be out-of-pocket for most expenses.
- ICBC will pay more for treatments based on current fair market rates. These rates have not been updated since 1991.
More services covered
- More types of service providers will be covered by ICBC, so that customers have more choice about the treatments they are able to receive.
- Kinesiology, acupuncture, counselling and massage therapy visits will be added to the list of pre-approved services that already include doctor visits, physiotherapy, occupational therapy and chiropractic treatment.
- Customers who are unable to work due to their injury will receive wage loss support of up to $740 per week, a 147% increase from the current $300 per week. This will be indexed to inflation to keep pace with the cost of living.
- If an injury prevents a customer from completing household tasks they are primarily responsible for (e.g., cooking, cleaning and other activities in the home), they will receive $280 per week in homemaking benefits – a 93% increase from the current $145 per week.
- In the event of death, up to $7,500 will be reimbursed for funeral costs, a 200% increase from the current $2,500; and, up to $30,000 will be available in death benefits, up from the previous rate which ranged from $17,580 to $20,080.
- ICBC will review other accident benefits (funeral, homemaker, death and accident benefits limits) on an ongoing basis.
Limits to minor injury claims
Massive increases in injury claim costs and payouts are a primary cause of soaring costs at ICBC and the biggest pressure on insurance rates. In 2016, payouts for injury claims reached a record $2.7 billion, an increase of 80% or $1.2 billion since 2009. The average claim paid out for minor injuries has risen from $8,220 in 2000 to $30,038 in 2016, an increase of 265%.
As of April 1, 2019, a $5,500 limit will be applied to pain and suffering payouts for minor injuries in British Columbia. Any compensation provided by accident benefits, such as benefits for medical treatments, wage loss and home care support, is completely separate from pain and suffering.
Claims that have already occurred, or that occur between now and the implementation date of April 1, 2019, will stay in the current system.
Drivers will have an option to purchase additional coverage for a higher limit in pain and suffering compensation. The limit will be set at $75,000 and will cost approximately $1,300 a year, on top of the cost of their basic and other optional insurance. Charging for this optional coverage means the customers who stand to benefit from increased coverage will pay for it, rather than every B.C. driver.
Currently, customers not at-fault for a crash are usually paid an amount for pain and suffering, which is in addition to compensation provided by accident benefits that include medical treatments, wage loss and home care support.
By introducing a limit to pain and suffering, along with other changes, ICBC will save more than $1 billion in claims costs annually.
Minor injury definition
ICBC will develop a clear, legal definition of what constitutes a minor injury in British Columbia. The new legal definition will include things like sprains, strains, mild whiplash, cuts and bruises, anxiety and stress from a crash. It does not include broken bones, brain injuries (concussions) or other more serious impairments.
A medical professional – not ICBC – will determine the nature of an injury and this will determine whether it falls under the definition of a minor injury. An injury initially diagnosed as minor may also be determined by a medical professional to become non-minor over time.
If, after 12 months, a customer continues to have serious impairment from the injury, or has a significant inability to care for themselves, it would no longer be considered minor and would not be subject to the limit for pain and suffering payouts.
New dispute resolution model for minor injury claims
As of April 1, 2019, the Civil Resolution Tribunal (CRT) will resolve certain disputes concerning certain motor vehicle injury claims: https://civilresolutionbc.ca
The CRT adjudicators are independent of ICBC and will provide fair, fast resolution, without requiring the involvement of a lawyer. The CRT aims to resolve claims in 60 to 90 days, on average, whereas the average legal claim with ICBC can take up to 30 months.
The CRT helps people resolve strata and small claims disputes quickly and affordably. It also encourages a collaborative approach to dispute resolution and is available 24/7.
- Today’s announced changes to ICBC
- ICBC posts net loss of $935 million for first nine months of fiscal year
- ICBC insurance rates the highest in Canada
- ICBC increases basic and optional rates by an average of 8%
- Crashes on the rise in B.C.; new ICBC campaign targets bad driving habits
- New B.C. government commits to fix ICBC to protect British Columbians
- The average BC driver will pay $1,970 by 2019 to prevent further ICBC financial losses
- ICBC changes basic insurance rates for multiple crash at-fault drivers
- ICBC steps up fight against auto insurance fraud in 2017
- ICBC rate increase could cost drivers an extra $42 per year
- ICBC collector status expanded to 1974 vehicles, including “muscle cars”
- ICBC applies to increase rates by another $60 per year
- Going up? ICBC insurance rates are