What would happen if B.C. scrapped public auto insurance?

The B.C. Conservative party has received some awkward media attention on its plans to change public auto insurance. The plan would, at a minimum, revoke the shift to a no-fault system introduced by David Eby in 2021 when he was Attorney General. The leaked Conservative letter to several insurance and legal associations also raises the prospect of “opening auto insurance to private competition.” 

A generation ago, Gordon Campbell promised to privatize auto insurance but changed his mind once he was premier after seeing the value it provided to B.C. Let’s take a look at public auto insurance in B.C., the 2021 reforms to the system, and how all of this stacks up against other provinces when it comes to household finances. British Columbians most likely don’t realize how good the public system has been in keeping a lid on rising auto insurance prices in recent years. 

Public auto insurance in B.C.

The Insurance Corporation of British Columbia (ICBC) was created in 1973 by the NDP government of Dave Barrett. The new Crown corporation was a response to high costs and coverage gaps in the private auto insurance market. To boost profits, private insurers try to weed out drivers whom they deem to have a higher likelihood of making a claim, or at least charge much higher premiums based on age, gender, or other factors. 

Public auto insurance allows for universal coverage and more coherent and stable pricing. It simplifies administration without needing multiple bureaucracies, and there’s no incessant drive to boost profits. Alignment with public policy is also important given the central social and economic role played by transportation. Rates go through a public process at the B.C. Utilities Commission.

That said, ICBC has often made a profit, which adds to the B.C. budget’s bottom line. ICBC’s contribution averaged $1.5 billion in each of the last three fiscal years, although the 2026-27 projection is a smaller $700 million. This is a remarkable turnaround from the late 2010s, when ICBC had a run of financial troubles, leading the provincial government to implement no-fault insurance for injuries in 2021. 

Then-Attorney General David Eby was tasked with fixing ICBC’s financial woes—attributed to the growing cost of accidents, both personal injuries and damage to more expensive vehicles. On the legal side, victims with major injuries often sought out lawyers to get sufficient compensation from ICBC in settlements, particularly in cases like head injuries that were not straightforward in terms of evaluation of injury and recovery. Lawyers would file the documentation, but most of the time a settlement with ICBC would be achieved shortly before the court date. Lawyers would typically walk away with a third of the settlement, an extremely high wage on an hourly basis, but victims would get more than they otherwise would for their care.

The no-fault reforms removed the right to sue for compensation, which cut out the large share of ICBC’s claim dollars going to lawyers. Simultaneously, ICBC increased the scope of health care services and costs available to victims (called “Enhanced Care”). Most of these represent supplemental health care like massage or physical therapy that are outside of the public health care system. They would otherwise need to be covered out of pocket or, if applicable, by a private health plan through an employer. 

ICBC’s costs for claims came way down, by about $2.3 billion (a drop of 35 per cent) from their pre-reform peak in the 2018-19 fiscal year to 2023-24. As a result of this mix, ICBC was able to lower premiums. ICBC dropped basic coverage rates by 15 per cent and made other reductions on optional coverage. The public insurer estimated that someone with full coverage would save $490 in the first year. Financially, the move was a success, and ICBC returned to providing dividends to the B.C. government in even larger amounts than before. 

While most drivers—and the B.C. government—have been better off, others argue that these savings have been at the expense of victims. This includes lack of compensation for pain and suffering from the forgone right to sue, as well as caps on income replacement (at 90 per cent of income up to a maximum $113,000). In other cases, caps on covered treatments put victims out of pocket, or that the value attributed to various injuries has been too low. 

Without the legal hammer, ICBC essentially has all of the bargaining power in these situations. At this point, it’s hard to know if these are a handful of anecdotes on the fringes or if they are indicative of deeper problems in how ICBC is managing its claims. A legislative committee had been holding hearings into the matter but was abruptly shut down when the writ was dropped to launch the 2026 election.

How does B.C. compare

Benchmarking B.C. against other provinces is challenging and there are few true apple-to-apples comparisons out there. There are several reasons for this, including scope of coverage and different policy terms, as well as demographic differences worked into rates (in provinces with private insurance). 

In B.C., ICBC’s monopoly extends to a mandatory “basic package” that includes coverage of injuries (regardless of fault), damage to your vehicle (if the other party is at fault) and up to $200,000 liability for injuries and damages to others. Beyond basic coverage, British Columbians can purchase additional optional coverage from ICBC or private insurers. 

In addition, there can be differences in deductibles (the amount you pay before the insurance coverage kicks in), co-payments and limitations of coverage. There are also differences in the package of care and services available should someone need to make a claim. 

The grey-suited accountants at Ernst and Young made an attempt (commissioned by ICBC) at an apples-to-apples comparison in 2022, after Eby’s no fault reforms. They created 30 profiles with different demographic and vehicle characteristics. B.C.‘s rates were consistently lower than in private insurance provinces.

Interestingly, B.C.’s rates were somewhat higher than Saskatchewan and Manitoba (the other public systems) in some cases, with the biggest differences for young drivers and those with at-fault accidents. In others, like claim-free adults and retired couples, B.C.’s rates were among the lowest in the country (note: Quebec was not included in the study). In addition to being public insurers, Saskatchewan and Manitoba also benefit in lower costs arising from smaller populations and lower urban population density. Nonetheless, it’s pretty clear that a public insurance model saves money for drivers. 

Another interesting study was commissioned by the Alberta government and considered the prospects of shifting to a public auto insurance model. They found that the typical driver and the system as a whole would save about 38 per cent by moving to the type of no fault public system that exists in B.C., Saskatchewan, or Manitoba. 

While these studies are now a bit dated, the core issues are the same. If anything, ICBC has been an affordability buffer. B.C. auto insurance rates in 2026 are a total of 0.4 per cent higher than in 2017. In the rest of Canada the average increase was 46 per cent over the same period, and as much as 117 per cent in neighbouring Alberta. The NDP has promised to freeze rates for the next three years.

The bottom line on auto insurance is that the system books annual profits, which have been used to keep premiums low and provide the occasional rebate. There’s a case to be made for using some of that money to improve the benefits and coverage for victims who are receiving insufficient care. In contrast, shifting away from no fault, and back to big legal battles, will clearly result in higher insurance premiums at a time when voters are looking for greater affordability. 

About the author

Marc Lee

Marc Lee is a Senior Economist with the Canadian Centre for Policy Alternatives. Marc joined the CCPA’s British Columbia office in 1998, and is one of Canada’s leading progressive commentators on economic and environmental policy issues. From 2009 to 2015, Marc led the CCPA’s Climate Justice Project (CJP), which published a wide range of research on fair and effective approaches to climate action through integrating principles of social justice. Marc continues to write about climate and energy policy, strategies for affordable housing, federal and provincial budgets and macroeconomics. Marc has an MA in Economics from Simon Fraser University and a BA in Economics from the University of Western Ontario. Marc is a past chair of the Progressive Economics Forum, a national network of heterodox economists. He also served as a Visiting Professor at Simon Fraser University’s School of Public Policy in 2024 to 2025.