A Crash Course in ICBC Caps

CBABC responds to “product changes”


As CBABC President, I learn about many different areas of practice of CBA members around the province. I certainly did not expect, however, to get such an in-depth education (a “crash course”) into the economics of ICBC and compensation for motor vehicle accident injuries. But recent government announcements have made that a necessity.

Reading through ICBC’s consultant reports and background information, I have had to work through language like “product change” – which is the euphemism that has been developed for minor injury caps. The CBA has long considered the right of an individual to recover general damages from the wrongdoer in motor vehicle accident (“MVA”) cases to be a vital hallmark of our system of justice. Minor injury caps are not a change to the insurance policy – they are a stripping of civil rights that have been in place for generations. This is much more than a product change.

I remain confused as to the justification for caps. We are told that the average current payout for pain and suffering on “minor” injury cases (which are not defined in the reports) is $16,500. A $5,500 cap will save $11,000 on average per claim. We are told these caps will save $1 billion per year. By my calculation, we will need to realize that savings 90,909 times over to reach the billion-dollar mark. But as I read the reports, there were either 45,0001 or 72,7352 bodily injury claims in total in 2016. The numbers don’t seem to add up.

The expansion of Part VII benefits is a welcome change – something the CBABC has been advocating for. The government suggests that those benefits can only be paid for through savings realized as a result of the minor injury cap. In fact, the net cost to ICBC of expanded Part VII benefits should be minimal. Innocent MVA victims already receive full reimbursement of medical costs through their tort claims – albeit at a later date. It is only those at fault whose entitlement will increase. As well, injured persons are more likely to take full advantage of available medical treatment where they are not required to pay up front and seek reimbursement at a later date – this should facilitate speedier recovery and reduce tort claims as well. By paying directly, ICBC should also be able to leverage its bulk buying power to negotiate special rates – again reducing costs. Changes to Part VII benefits should stand on their own as an important improvement to ICBC’s dealings with those injured in motor vehicle accidents.

The media campaign in support of minor injury caps emphasizes the need to reduce legal costs. However, there is no effort to tackle legal costs head-on. Rather, the caps are aimed at reducing the rights of victims of motor vehicle accidents to obtain compensation – with the hope that legal costs will be proportionately affected. There is much that can be done to streamline the system – and, in particular, the number of expensive medical reports and independent medical examination’s that makes up one of the largest elements of “legal costs.” It is not clear why these issues are not tackled directly as a starting point, rather than indirectly through limits on the rights of victims.

Finally, I am surprised that so little attention has been given to the government services provided by ICBC at the expense of policy-holders. ICBC spends about $70 million per year to run Driver Licensing and Testing services. In the course of that work, it collects driver license and vehicle registration fees as well as provincial sales tax on vehicle transfers – all of these monies are remitted directly to the provincial government in full.

The major cause of ICBC’s increasing costs is clearly poor driving – and, in particular, distracted driving. It is good to see the government moving on some of these areas – both through strong enforcement and through the recently announced consultation – open until April 5 – on ICBC’s rate structure.

I acknowledge the assistance of our CBABC Automobile Insurance Committee, consisting of both plaintiff and defence counsel experienced in motor vehicle cases, who are helping develop CBABC’s advocacy in this important area. The CBABC will continue its dialogue with the government in the months to come.

  1. E&Y report p. 72 |
  2. PWC report p. 29 |

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