ICBC pays insurance brokers $6M ‘transition payment’ for new rate changes

Shifting gears to follow a driver’s record instead of the insurance policy holder is the largest rate structure overhaul in ICBC’s history.

The public insurer has paid to train thousands of brokers across the province on the new system that took effect on Sept. 1.

But on top of that training, Global News has learned brokers are also receiving a $6-million top-up to cover the extra work associated with the new rate changes.

“It was really to acknowledge the extra effort and investment brokers have done to make sure that our customers can transition into the new model seamlessly,” ICBC spokesperson Joanna Linsangan said.

In a letter to brokers dated Jun 28, 2019, ICBC’s director of insurance sales and broker governance John Dickinson said the “transition payment” was in “recognition of additional costs anticipated by brokers when implementing the new model.”

“Payment will be calculated proportionally based on the transaction volume per office,” Dickinson wrote. The payments would be made July 15, according to the letter.

When asked what those “additional costs” were, Linsangan said it could include extra staff, extended hours even sending pamphlets informing clients of the rate changes.

WATCH: (Sept. 1) Family calls new ICBC rate system a rip-off

2:03 Family calls new ICBC rate system a rip-off

Brokers are paid a modest flat rate for selling ICBC’s basic insurance, a mandatory purchase for any British Columbian driving in the province.

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Commission jumps much higher for ICBC’s optional coverage, with rates climbing up to 19 per cent even for simple renewals.

It is unclear whether the $6 million was a proactive gesture from ICBC, or if it was demanded by the insurance broker industry.

No one from the Insurance Brokers Association of BC would comment on transition payment Thursday.

In an interview in January with Global News, the association’s executive director Chuck Byrne said the task of dealing with complex insurance quotes and questions warranted the high commission rates.

WATCH: (Jan. 8) Exclusive documents raise questions about ICBC broker fees

2:09 Exclusive documents raise questions about ICBC broker fees

“The easy ones, that’s a pretty good price to receive in payment for services,” Byrnes admitted at the time.

“The bottom line is there’s a lot of complexity that brokers deal with that requires more time,” he added.

Kris Sims, the B.C. director of the Canadian Taxpayers Federation, does not blame the brokers for taking the money — but she calls it an unnecessary use of public funds by ICBC.

“The retraining has already been paid for. This is just extra, over and above? They don’t need to hand this money out,” said Sims.

“This is not up to ICBC to offer up more money coming from drivers for a change that should be quite simple.”

Some drivers, including Nikita Lahoda, said that money would be better spent making insurance more affordable.

Lahoda recently renewed her plan under the new rate system and said the process still only took about five minutes.

“I feel like that money could have been allocated in a more responsible way,” she said.

ICBC Broker Document by Sean Boynton on Scribd