BC's long struggle for better, more affordable car insurance

BC drivers today have vastly improved coverage and lower rates for car insurance.

Don’t take it for granted. It has been a long struggle against formidable odds and powerful vested interests to achieve that.

Through thick and thin – as most recently evidenced by the Horgan government’s decisive actions – the BC NDP has fought for a better deal and better protection for drivers.

Other parties have done the opposite.

The BC Liberal and Social Credit parties both collected substantial political cash from large private insurers and ambulance chasers. The actions of their governments forced drivers to pay the price.

The wild west of car insurance

In the 1960s, for-profit insurance companies had free rein over B.C. drivers. They creamed the best and penalized the rest. Unable to afford it, thousands of drivers drove without insurance, risking accidents that could ruin their lives forever. Young people were routinely forced to pay higher rates based on their age, not their driving record. A minor fender bender could result in a tripling of premiums.

Members of the newly formed BC NDP saw a better way. Meeting in convention, they proposed car insurance should be provided as a non-profit public service to all British Columbians, not as a profit centre for private corporations.

In the late 1960s, the public anger with rising rates and poor service forced the Social Credit government of the day to finally get involved. They established a royal commission. Chaired by BC Supreme Court Justice Robert Wootton, the commission reported in 1968 that rates were excessive and unjustified. The report also said a significant number of people were driving without insurance.

After examining the conduct of 175 companies, the Wootton commission recommended a no-fault system and compulsory insurance for injuries – adding that the government should take over as the sole seller of car insurance if the industry failed to adopt his recommendations.

In 1969, the Socreds made it mandatory for vehicle owners to carry a minimum of $50,000 in liability insurance, but did nothing to control runaway rates. In effect, the government guaranteed even more profit for private insurers by forcing drivers to buy the over-priced coverage.

A game changer for BC drivers

Public car insurance, delivered at cost, was a major part of the BC NDP’s platform in the 1972 election. As Premier Dave Barrett noted, there were no insurance companies based in BC so all of the profits went directly to Bay Street and Wall Street.

Creating BC’s own insurance company was the Barrett government’s first priority in the first full session of the Legislature in 1973.

“Government-owned automobile insurance represents an opportunity for the people of British Columbia who use their automobiles as a utility to have the right to decent automobile insurance protection at no-profit rates,” Barrett said.

Former party Leader Robert Strachan, serving as Transport Minister, took responsibility for getting the Insurance Corporation of BC (ICBC) up and running. By March 1, 1974 it would provide insurance at cost. As an added benefit, drivers’ premiums would now help to create new jobs and opportunities in our province, not Toronto and New York.

The creation of ICBC was a game changing achievement that strengthened our economy and benefited drivers. The actions of subsequent governments made it clear they had other priorities.

Socreds impose massive premium increases

Less than a month after they were elected in 1975, the Socreds announced a massive increase in premiums, and subsequently opened the door for private companies to sell optional insurance. For people under 25, they increased the cost of basic insurance by 250 to 350 per cent.

There were massive protests. Thousands gathered to hear NDP MLAs and others speak out against the assault on drivers. At a rally in Surrey, more than 3,000 crowded into an auditorium. Outside in the parking lot, a motorist took his car permanently out of service with a sledge hammer. More than 250,000 British Columbians signed petitions in protest.

Drivers weren’t the only ones who felt betrayed. Even though the huge rate increase virtually guaranteed greater profits on optional insurance, the private insurance companies wanted more. Their lobbying agency, the Insurance Bureau of Canada, asserted that the Socreds won “with support from the insurance industry” and had been heavily lobbying for a return to the basic insurance market.

In 1984, the Socreds sold ICBC’s general property insurance division – a division that could have been a potential life saver for condo owners who today are dealing with heavy rate increases imposed as a result of extreme weather and large increases in claims outside BC

When NDP MLA Dennis Cocke spoke against the sale of the general insurance division, a Socred cabinet minister yelled, “We won the election, in case you didn’t notice.”

“No, the insurance companies won the election. We know that. You’re their representative and always have been,” replied Cocke.

Improving safety on the road

In the 1990s, under the NDP governments of Mike Harcourt and Glen Clark, ICBC became more active in promoting and funding traffic safety initiatives – a public benefit that would never be possible if B.C. drivers had to rely on national and international insurers competing against each other for profits.

ICBC provided safety education in schools and communities, supported CounterAttack measures against impaired driving, and funded the redesign of unsafe intersections. In 1996, vehicle registration and driver licence services were transferred from the Motor Vehicle Branch to ICBC, thereby integrating services under one roof.

Stealing from drivers to pad provincial coffers

Starting in 2001, BC Liberal governments were even more relentless than the Socreds had been in their attacks on BC drivers. They consistently undermined our publicly owned non-profit insurance provider.

Soon after their election, they announced they would encourage greater competition in optional insurance, and paved the way for private insurers by increasing ICBC’s optional insurance rates by 18 per cent over two years.

Then came the world financial crisis, a decline in provincial revenues, and the debacle over the Liberals’ attempt to introduce a harmonized sales tax (HST). When the HST was defeated in a referendum forced by public outrage, the province was unable to collect a $1.6 billion inducement from the federal government.

To help balance the books, they raided ICBC. In 2010, they announced they would transfer $778 million from ICBC to general revenue over the next three years. It was unprecedented. Drivers had clearly been charged too much, and now their money was being diverted to make the government’s finances look better. The Vancouver Sun called it a “stealth tax” on drivers. By the time the BC Liberals were defeated in 2017, they had seized a total of $1.2 billion from ICBC.

Public insurance, as designed by the Barrett government, was operated on a break-even basis to serve drivers. With little regard for ordinary people, and a nod and a wink to private insurers, the BC Liberals fundamentally changed that. They forced ICBC to repeatedly raise rates, and seriously wounded the company by turning it into a hidden source of cash for the government.

Better coverage at lower rates

Since the election of the Horgan government, the BC NDP has taken dramatic steps to undo the damage, significantly improve insurance coverage, and lower rates by an average of 20 per cent. In addition, instead of seizing money for the government’s coffers as the BC Liberals did, the savings realized when there were fewer accidents during the COVID-19 pandemic were rebated to BC drivers.

“It’s time for change at ICBC,” said Premier John Horgan as his government announced steps to transform car insurance in early 2020.

“The old government ignored ICBC’s problems, allowing it to become a system that made lawyers rich, while drivers paid too much for insurance. We’re going to transform ICBC to lower rates for B.C. drivers – saving you an average of $400 on your insurance, while also improving care for people who have been injured in a crash,” he said.

It’s been 60 years since party members met in convention to create the BC NDP. Since then, whether in government or opposition, the party has consistently fought for a better deal for drivers as an important part of its long standing commitment to making life more affordable for ordinary people. It is a proud record. It stands in stark contrast to the relentlessly harmful actions of other parties.

Better coverage at lower rates. One more way the BC NDP is working for you.