Dousing the flames of the 'dumpster fire' in 2019

February 13, 2019

You may have heard that car crashes in B.C. reached an all-time high in 2017. You may have also heard many people reference how these crashes are contributing to the financial losses which has been dubbed the 'dumpster fire' that ICBC's facing today.

So where does the money come from to fix cars and rehabilitate people? From the money we collect when you buy car insurance. Problem is that right now, for every $1 we collect, $1.23 goes out the door. Overall, claims are costing us approximately $15 million every single day.

This situation is unsustainable, which is why a number of changes are happening this year so we can continue to focus on providing auto insurance that takes care of you.

While we're addressing this problem on a number of fronts, the two solutions that'll have the largest impact—and save about $1 billion a year combined—is limiting how much someone can claim for 'pain and suffering' (explained below), and dealing with disputes via the Civil Resolution Tribunal, instead of through the traditional court system.

This post will dig deeper into the first solution, but first, a little bit of car insurance 101:

What happens today when you get into a crash

Today, if someone crashes into you and you get hurt, you have the choice to take that driver to court and sue them for 'damages'.

Damages cover off two main categories—pecuniary and non-pecuniary damages. Pecuniary damages are for things that you can quantify in monetary terms such as lost wages, medical expenses, repair or replacement costs. Non-pecuniary damages are intended to compensate you financially for the emotional distress and inconvenience of getting hit by their car in the first place, otherwise known as 'pain and suffering'. While what you seek in pecuniary damages is limited to what you can measure, currently there's no real limit to how much you can try to claim for pain and suffering.

Bumps and bruises vs. broken bones

ICBC categorizes injuries into two groups: minor and non-minor.

Of the hundreds of thousands of crashes that happen every year in B.C., the majority of people suffer minor injuries. That might look like a few weeks of a sore back, or some cuts and bruises.

Non-minor injuries are serious, can be life-changing, with the ability to affect you for years. If you break a bone, whether in your pinkie or your leg, your injury would be classified as non-minor.

What people are getting for their injuries

The average claimant with a minor injury receives $30,038. A person with more serious injuries gets about $48,078. Looking at payouts from 2000, you'll see that there's a huge jump in the amount of money a person with a minor injury gets, while payouts for a more serious injury, is a more modest increase.

Breaking down the average minor injury claim, 25% are for pecuniary damages, while more than half is for pain and suffering.

Limits to pain and suffering for minor injuries

How do you put a price on short-term pain, anxiety, insomnia or depression? It's been done elsewhere in Canada and B.C. is moving in that direction, too.

Other provinces have long since had limits to how much someone can be paid for pain and suffering. For example, in Alberta, it's $5,020, Newfoundland is $2,500 and Nova Scotia is $8,486.

Starting April 1, anyone who sustains a minor injury in B.C. will have access to a greater suite of medical benefits to help with their recovery. Those who are the victims—meaning they didn't cause the crash—will still be able to recover what they incurred in damages. The only change is how much they can recover for non-pecuniary damages, which will be up to $5,500.

This limit won't apply to anyone who suffers more serious injuries, just the minor ones. You can read the detailed definitions of a minor and non-minor injury in the B.C. government's official regulation. That's what we'll be referring to when we receive your doctor's diagnosis on your injuries to determine what type of injury you have.

The cost of the current model

Early numbers show that in 2018, injury claims will cost $3.67 billion—an increase of 43 per cent in just five years.

The challenge of these cost pressures is significant but we know that we need to keep insurance working for all British Columbians. The financial implications of these challenges affects all drivers and we'll be introducing a number of changes to quell the flames and, at the same time, modernize B.C.'s auto insurance model.

Stay tuned for more posts on the changes to come, like how you'll soon be getting much more for the insurance you buy.