Insurance Brokers Criticize BC Report Claiming Province’s Auto Insurance Among Lowest in Canada

Vehicles move in Vancouver in a file photo. (The Canadian Press/Jonathan Hayward)

A report recently released by a Crown corporation in B.C. comparing how auto insurance rates in nearly every province are more pricey than in British Columbia is facing criticism.

The report, commissioned by the Insurance Corporation of British Columbia (ICBC) and conducted by international accounting firm Ernst & Young (EY), was released on Dec. 8 by ICBC, stating that “B.C. drivers pay among the lowest auto insurance rates in Canada.”

The report compared the rates in nine provinces and looked at 30 different driver profiles based on a set of criteria including age, gender, marital status, employment status, years licensed, vehicle, average daily commute, and annual kilometres driven—except from Quebec.

Less than a week after the report was released, two insurance agencies issued press statements questioning the validity of the findings.

The Insurance Brokers Association of Alberta (IBAA) argued that the methodology of the EY report has “several key shortfalls” and “should be read with a healthy dose of skepticism.”

“We have serious concerns that the methodology used paints a skewed picture of Alberta’s auto insurance market and presents misleading findings as to the prices drivers are paying,” said IBAA on Dec. 13.

According to the EY report, Alberta’s rates are among the highest in the country when compared to other provinces.

‘Not Realistic or Accurate Representation’

IBAA alleged that EY did not present the lowest quote when reporting the rates it suggests drivers are paying.

“Instead, they dropped the lowest quote and took the ‘average’ of the higher prices they obtained for the same level of coverage,” the non-profit trade association said.

“This is not a realistic or accurate representation of consumer purchasing habits. Insurance brokers do not select the ‘average’ of the higher prices, but rather the best price for the best insurance.”

The statement added that EY’s report declined all discounts offered in Alberta, which further drove the quoted premiums higher.

The association, which represents about 260 individual brokerages with offices in Alberta, the Yukon, the Northwest Territories, and Nunavut, cited an example of how brokers work with their clients to identify the lowest possible rates while ensuring complete coverage.

“E.g., bundling home and property insurance may entitle customers up to a 20 percent discount from many private insurers, whereas public insurers do not have to compete for business so they do not offer these discounts,” the agency said.

In addition, IBAA noted that the quotes stated in the report were generated through an online quoting portal and did not utilize the efforts of a licensed insurance broker. “Using a broker would [typically] yield additional and more affordable quotes,” it said.

‘Findings Cannot Be Validated’

The Insurance Bureau of Canada (IBC), a national industry association representing Canada’s private home, auto, and business insurers, alleged that the EY report “did not account for significant differences” in coverage levels between the auto insurance of B.C. and Alberta.

“Under the Crown insurer’s no-fault insurance model, there are strict limits on recovery benefits and no ability for drivers to seek legal recourse for additional compensation,” IBC said on Dec. 14.

“This is vastly different from the Alberta auto insurance market, where drivers can sue for additional recovery benefits.”

The IBC criticized EY’s findings, saying that data for auto insurance premiums and claims were not utilized from the General Insurance Statistical Agency (GISA), a statistical agency for nine participating insurance regulatory authorities across Canada.

“GISA’s data was not utilized in this report and, therefore, EY’s findings cannot be validated,” it said.

The IBC’s statement also stated that Quebec, whose information is required for comparison purposes, was not included in the EY report.

Response

ICBC countered the allegation that Quebec’s information was deliberately omitted. The Crown insurer had commissioned EY to conduct the research in both 2021 and 2022, with support from provincial auto insurers in Manitoba and Saskatchewan.

“Quebec was not included in the EY report because Quebec’s detailed information required for comparison purposes was not available,” said ICBC spokesperson Brent Shearer in an email on Dec. 16. “This is clearly stated in both reports.”

Under the “Sampling Process” section of the 2022 report, EY stated that “information at the granular level of detail required for the comparisons was not available for Quebec.”

Shearer also challenged the allegation that the sampling process and methodology were questionable.

“Any suggestion ICBC is somehow being misleading with how the information is presented is untrue and unfounded, particularly since the reports were carried out by a third-party,” he said.

On how the average prices were derived, Shearer referred to the “Rate Comparisons” section in the EY report.

“In cases where five or more sampled quotes were obtained for a given customer profile in a certain city, an average of the second to fourth lowest rates quotes was used in the comparisons,” the report said.

“This average was intended to reflect the likelihood that a customer shopping for insurance is most likely to choose one of the best rates available to them.”

The spokesperson claimed that “even if the focus had been on the lowest cost of auto insurance in each city instead of an average, B.C. cities would still largely be more affordable than comparable cities in Alberta and Ontario.”

“Keeping ourselves and British Columbians informed about how our auto insurance rates compare to the rest of Canada is part of ICBC’s commitment to transparency and accountability,” he said.