As the Insurance Corporation of British Columbia (ICBC) announces another significant rate hike, a comparison of Canada’s automobile insurance and personal injury (PI) regimes seems apropos. I focus on three provinces to provide a cross-section of Canada: British Columbia, Alberta and Quebec.
Major heads of damage in personal injury are generally phrased as some combination of the following: general damages, loss of earning capacity, and out-of-pocket expenses (including health-care). It is important to note that while third-party liability insurance legally covers an at-fault driver through indemnification against civil liability, its functional role is to provide compensation to injured parties. In BC, for example, severely injured parties would be unlikely to fully collect on their judgments, but for the tortfeasor’s insurance.
There are also major differences across Canada in terms of who the insurers are. British Columbians receive their basic insurance through the provincially-owned megalith, ICBC. Albertans get their coverage through a regulated private insurance market, and residents of Quebec are covered against personal injury by that province’s Société de l’assurance automobile du Québec (SAAQ), and against property damage by private insurers.
Both British Columbia and Alberta’s tort-based regimes require $200,000 per accident in mandatory third-party liability insurance (TPL). BC also provides $150,000 in no-fault medical payments – triple Alberta. Quebec requires $50,000 in TPL. In Quebec, however, TPL covers property damage only. Quebec personal injuries, on the other hand, are covered by the no-fault SAAQ, which provides 90% income replacement as a non-taxable benefit, up to $71,500 annually, and unlimited medical payments.
In BC and Quebec, insurance regulation happens directly through ICBC and SAAQ. Private insurers in Alberta are regulated by that province’s Automobile Insurance Rate Board (AIRB), which sets maximums for mandatory insurance premiums. According to the AIRB, more than 93% of Alberta drivers pay less than the cap, which would agree with various papers positing privatization in BC would improve efficiency and reduce premiums.
In addition to Canada’s general cap on personal injury (Andrews v Grand & Toy Alberta Ltd., [1978] 2 S.C.R. 229), Alberta has legislated caps on “minor” personal injuries under the Minor Injury Regulation, AB Reg 123/2004 (affirmed in Morrow v Zhang, 2009 ABCA 215, leave to appeal denied).
Perhaps, unsurprisingly, insurance premiums differ drastically. According to lowestrates.ca, under Quebec’s no-fault system, citizens pay an average of $642 per year, Alberta’s private insurers charge an average of $1,004, and ICBC charges an average of $1,113 annually.
ICBC said in 2015 that legal fees amounted to $306 million, or 20% of the cost of bodily injury claims, not to mention the social cost of running the court. By contrast, the SAAQ’s documentation provides that “[a]nyone who sustains bodily injury in an accident is compensated regardless of whether or not that person is responsible for the accident. Suing for damages in civil court to cover bodily injury is therefore eliminated” [emphasis in original].
The tort/no-fault debate is long-standing, and almost all provinces have struck a balance. One of the benefits of no-fault regimes is the redirection of money from justice administration to injured persons. This likely also means, of course, that more money ends up in the hands of people that aren’t as injured as they claim, which may create other social costs.