Auto Insurance

B.C. drivers pay hundreds of dollars a year more than Alberta drivers for auto insurance

By: Jessica Mach on March 21, 2019

What’s the difference between what drivers in British Columbia and Alberta pay annually for auto insurance? Hundreds of dollars.

The figure comes courtesy of a new report commissioned by the Insurance Bureau of Canada (IBC), which represents the country’s private home, auto and business insurers, and which has long lobbied for B.C. to dismantle its public insurance model.

In a scenario involving the same car (a Ford truck) and two drivers with identical profiles, the driver living in Surrey, B.C. would pay $2,058 annually for insurance, while the driver living in Calgary would pay $1,399, according to the report, which was conducted by business consulting firm MNP. That’s a $659 difference.

In a second scenario, involving a family of three, a 2012 Honda Accord, and no at-fault crashes, the family in Kelowna would pay $1,688 per year, while the family in Red Deer would pay $1,125 — or $563 less.

A third scenario saw a woman with no at-fault crashes on her record, driving a 2014 Honda Civic would pay $2,897 in Vancouver compared to $2,209 in Calgary — a $688 difference.

MNP calculated these figures by working with a broker in Alberta, who gave the firm eight quotes for each driver profile. The firm then found the average of the three cheapest quotes for each profile, as well as the lowest quote in Alberta, and compared them with quotes from B.C.

In B.C., drivers are required to buy their auto insurance from ICBC, a crown corporation that charges drivers some of the highest auto insurance rates in the country.

Alberta, like most provinces in Canada, has a private insurance model that allows drivers to compare rates from multiple providers. If B.C. also adopted a private model, IBC has argued, customers would have more auto insurance options, and insurance companies would have to push their prices down to compete on the market.

In 2018, ICBC posted $1 billion in losses, which the corporation blamed on premium rates that weren’t high enough to cover what it was paying out in claims.  The corporation later announced that it would be changing the way it calculated rates, which it estimated would help lower premiums for two-thirds of B.C. drivers. By the end of the year, however, ICBC was petitioning the province’s insurance regulator to hike rates again.

Still, ICBC’s CEO told Global News that he is skeptical that IBC’s report paints a fair picture of how public insurance models stack up against private marketplaces.

“When you are doing comparisons from province to province it actually gets quite complicated,” said Nicolas Jimenez. “The reality, when you look at B.C. to Alberta, what you are getting is a very different product in British Columbia. Our accident benefits are six times higher, you know the liability benefits are double, the wage benefits are double. It’s like comparing an Audi A4 to Honda Civic.”

“What the report is failing to mention is the solution here in British Columbia is not a public-private debate, it is to fix the system. The system is not about who delivers it, it’s about the product.”

Meanwhile, B.C. attorney general David Eby pointed to Ontario and Alberta — both of which have private insurance markets — as evidence that private is not always better.

In January, auto insurers in Ontario hiked rates for the fifth consecutive quarter. That same month, insurance companies and brokerages in Alberta reported losing money due to the province’s caps on rate hikes. These rate hikes may partially account for the huge premium differences seen by Alberta and B.C. drivers.

“I don’t pretend for a second obviously that we are in any less crisis than Alberta and Ontario,” Eby told Global News. “We’re all in insurance crisis, just different kinds. None of the crises in any of the provinces are going to be addressed but public or private.”

“What is going to address the crisis is fixing the system.”