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Before COVID-19 dominated the headlines, the leading story in BC was the Provincial Government’s plan to transform the Insurance Corporation of British Columbia (ICBC) into a no-fault system of auto insurance. While the response to COVID-19, understandably, remains front page news, major legislation affecting BC road users made its way through the legislative process this summer with relatively little media attention.
On Friday, August 14, 2020, Bill (No. 11) Attorney General Statutes (Vehicle Insurance) Amendment Act, 2020 received Royal Assent in the BC Legislative Assembly.
The changes to ICBC will take effect as of May 2021. The Provincial Government refers to the overhaul as a new “care-based insurance model” that will replace the current tort system. Its stated goal is to save drivers money on their auto insurance and to provide enhanced medical care, recovery, and wage loss benefits without litigation.
While much of the details will be filled in by the Regulations, which have yet to be drafted, the bottom line on no-fault is that ICBC will pay compensation and benefits directly to injured persons regardless of who is at fault. This also will remove the option to engage immediately in a lawsuit to recover damages, unless the incident involves criminal offences.
Since the early 1970s, BC has operated a tort-based insurance system with ICBC holding a monopoly over basic auto insurance (“Basic Autoplan”) that all British Columbians who own and drive a motor vehicle must purchase. This system reserves the right of an individual in a motor vehicle accident who is not at fault to pursue compensation for additional losses by suing the at-fault driver and vehicle owner.
A minimum level of automobile insurance coverage is mandated and compulsory in every jurisdiction in Canada. Automobile insurance regimes can generally be described as being based primarily upon tort-based or no-fault-based rules, and are either publicly or privately provided.
BC is the last province in Canada with an unrestricted litigation-based insurance model that is publicly funded (through ICBC). Though also known as a “full tort” system, compensation for losses such as additional medical and rehabilitation costs, additional income replacement, or pain and suffering are, in the first instance, restricted by the at-fault driver’s and vehicle owner’s insurance policy limits, and thereafter depend on their ability to pay an award beyond their policy limits.
Auto insurance in Alberta operates under a tort-based insurance system, but is provided through private insurance companies. In the event of a collision, drivers are only compensated a certain amount from their own insurer and then must pursue claims against the other party’s insurance provider for any additional compensation.
In Saskatchewan, auto insurance is publicly provided through Saskatchewan Government Insurance (SGI), a crown corporation. The default insurance plan includes no-fault personal injury coverage, but drivers may opt-out in favor of a SGI tort-based policy that allows them to sue the other party involved in the accident.
Auto insurance in Manitoba is publicly provided through the Manitoba Public Insurance (MPI) with a full no-fault system. MPI is a non-profit, public auto insurer that decreases rates for consumers if it earns its targets in premiums.
Ontario has a no-fault auto insurance system with private insurance companies. However, even though the Ontario government does not provide the insurance, auto policies are heavily regulated.
Currently in BC, the ICBC Autoplan provides anyone injured in a crash with no-fault accident benefits consisting of both wage loss indemnity and access to up to $300,000 in coverage for medical and rehabilitation costs. Basic insurance also provides at least $200,000 worth of third-party liability coverage to cover the costs in the event of being found at-fault for a crash and responsible for causing injury or property damage, although most vehicle owners carry much higher third-party liability coverage.
In February 2020, the BC Government announced its intention to replace the current Autoplan tort model with an “Enhanced Care” no-fault insurance model, starting in May 2021. All British Columbians will transition to Enhanced Care coverage whether the claimant is a driver, passenger, pedestrian, or cyclist, and regardless of whether at-fault for a crash or involved in a single-car collision.
British Columbians have been told to expect significant savings on their insurance premiums with the transition to Enhanced Care coverage. Enhanced Care is forecasted to save more than $1.5 billion in the first full year, which the BC Government has promised will be passed entirely on to ICBC customers through lowered insurance rates and improved care benefits. The forecast is that each driver/owner can expect to save about 20 per cent on their insurance rates, with an average of $400 per person.
Disputes over ICBC’s handling of a claim may still be directed to the BC Ombudsperson or to the provincial Civil Resolution Tribunal (CRT). Further, a new Fairness Office will be created specifically for claims disputes.
Section 120 of the Attorney General Statutes (Vehicle Insurance) Amendment Act, 2020 requires ICBC to assist each claimant with making a claim, and endeavor to ensure that each claimant is informed of, and receive, all the benefits to which they are entitled. How this would be enforced and the remedies for breach remain to be determined.
In the meantime, as expected, widespread opposition to the change to a no-fault auto insurance system has been expressed by many members of the legal community, as well as in the political arena and within the insurance industry.
The Trial Lawyers Association of BC and the BC Branch of the Canadian Bar Association strongly oppose the Government’s switch to no-fault for ICBC. They are deeply concerned with what much of their membership sees as reducing the rights of injured persons who will no longer have their claims assessed based on their individual circumstances to the same degree as provided by the tort system.
Some opposition members of the Provincial Legislature have also expressed concerns about the change to no-fault auto insurance. For example, Surrey South Liberal MLA Stephanie Cadieux cites reasons such as more bureaucracy and less choice. She believes that no-fault insurance will take rights away from catastrophically injured people, as the proposed legislation will seek to manage an injured party’s disability forever, forcing injured individuals to continually seek approval from ICBC to receive their benefits.
In an open letter to Premier Horgan in July, the Insurance Bureau of Canada also expressed its apprehension about further limitations to consumer choice in BC, including possibly eliminating other insurers from the optional market.
We will have a better idea of how ICBC plans to operate under this new no-fault system once the Regulations are drafted when the Legislative Assembly returns in October. We will also see if the opposition to the no-fault system picks up steam. Stay tuned.
* Cen Yang, summer articled student, assisted with the preparation of this article.
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Singleton Reynolds represents the insurance industry in a wide variety of matters including subrogated actions, defence of professionals and directors and officers, product liability claims, fire litigation, personal injury claims and class actions.
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