ICBC insurance is definitely more expensive than the programs available in other provinces of Canada, particularly Alberta.
Why is that? And would scrapping public insurance get us cheaper rates, or higher taxes and costs elsewhere?
This isn’t a simple question.
The biggest financial problems at ICBC come from two problems – first, the company was treated as a piggy bank by the previous Liberal government, which took cash out for general revenue, helping keep taxes down – and the cost of insurance sky high for drivers.
Second, an increasing rate of accidents, increasing repair costs for modern cars, and spiraling rates of injury claims, have made every fender bender more likely to turn into a multi-million dollar headache for the insurer.
But beyond that, ICBC isn’t an ordinary auto insurance company.
ICBC doesn’t just issue insurance. It also issues driver’s licenses and conducts the road tests. It participates in public safety campaigns, in cooperation with various local police forces and RCMP detachments.
It also directly funds road improvements where there’s an indication that fixing up roads and intersections can cut down on the accident rate. It’s co-funded 6,500 projects to the tune of $150 million since 1990.
If we privatized auto insurance, one of the reasons it would get cheaper right away would be because those functions would still fall on the government’s ledger.
In other words, we’d still wind up paying for them, through taxes.
The question is, do we want those services to be “user pay,” funded by drivers, or for the cost to fall on all British Columbians, through other taxes?