19 Jan Make The Private Insurers Pay, Not ICBC
ICBC costs keep climbing which could be halted by implementing this system
ICBC, in recent time, is claiming escalating costs are driving up premiums that the British Columbia motorists have to pay. Of course, the motoring public, when faced with news of premium rate increases, reacts negatively. The ill-informed press blame lawyers, expensive cars, and even the injured victims for the rising costs.
The obvious solution to making a massive dent in raising ICBC costs is to no longer allow private insurance companies to “subrogate” for a return of their claim payments.
Here is how the system now works. A disability insurance company or an insurance company covering medical expenses is required to pay out claims of their clients as per the insurance contract. They have a large group of clients that pay premiums to the insurance company. The hope of the insurance company is that the premiums collected exceed the pay-outs so they can enjoy healthy profits.
If the client has no ICBC claim, the private insurer must pay out claims as per the insurance contract and has no way of getting their money back. It is the cost of doing business. However, in almost every situation nowadays where the client is injured in a vehicle accident and can recover wage loss and/or medical expenses from ICBC, these private insurance companies seek to recover their pay-out from the client, who in turn, tries to collect from ICBC.
The end result is ICBC is paying back the private insurers tens if not hundreds of millions of dollars each year.
So does ICBC get the premiums these private insurance companies collect? Of course not. The end result of this system is the private insurance companies get to improve their profitability by millions and millions of dollars each year at the cost of ICBC, who in turn passes the cost on to the motoring public in the form of increased premiums.
I am sure the private insurers have a significant voice in Victoria making the BC Government hesitant to shut down the Gravy Train but where is the fairness in the private insurers being able to collect healthy premiums from their client while at the same time getting ICBC to cover their contractual obligations for these same clients?
Why doesn’t ICBC get these premiums from the private insurers if ICBC is the company exposed to paying the claim? Why does the motoring public have to cover the private insurance company’s profit margins?
In summary, an easy fix to ICBC’s rising costs is to require private insurance companies to pay-out their contractual obligation for wage loss benefits and/or medical expense coverages without the opportunity to collect the money back from ICBC. Subrogation rights can easily be eliminated by one addition section in the Insurance (Vehicle) Act or its Regulations.
Written by Wes Mussio of Mussio Goodman Law Group
Photo credit: Julia Tim / Shutterstock