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B.C. won’t look at moving ICBC broker system online until insurer’s financial mess is cleaned up

Delayed overhaul of broker system contributes to ICBC dumpster fire
Richard Zussman reports on why ICBC's decision to delay the modernization of its broker system is contributing to its staggeringly poor fiscal performance.

The B.C. government says it won’t be looking at potential ICBC cost savings by modernizing the broker system until the finances at the public insurer are improved.

Attorney General David Eby has left the door open for brokers going online, but says the current uncertainty around the new rate structure makes the in-office brokers essential.

“It hasn’t been a priority. The priority as been getting costs under control. As we start stabilizing ICBC books it is something we will start looking at,” Eby said.

ICBC pays brokers millions for rate changeover
ICBC pays brokers millions for rate changeover

The BC Liberals have suggested moving the broker system online could lead to immediate savings at ICBC.

In the 2016/17 fiscal year, which was 15 months due to fiscal calendar transition, brokers were paid $510 million by ICBC. In 2017/18 brokers were paid $434 million and last fiscal year the bill was $490 million.

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“We have had an ICBC monopoly for 46 years and the government have not wanted to modernize anything,” BC Liberal Leader Andrew Wilkinson said.

“We say give people a choice.”

Online auto insurance purchasing coming to B.C.?
Online auto insurance purchasing coming to B.C.?

But the brokers have recently been thrust into a more critical role than before. In September, the insurer started the largest rate overhaul in the company’s history.

Eby says brokers have been critical to help customers successfully transition to the new model, and they are able to provide important advice and guidance for customers as they renew their insurance, including which discounts they are eligible for, ways to keep their rates as low as possible, and information about how and when they need to list other drivers on their policy.

“Brokers are more important than ever talking people through this on how listing someone or not listing someone can effect their liability,” Eby said.

ICBC paying millions in broker fees
ICBC paying millions in broker fees

ICBC pays Autoplan brokers a flat fee for basic insurance transactions and a commission percentage for optional insurance sales.

Optional commission is paid on a sliding scale based on the risk with the top commission set at 19 per cent. The commission rate was reduced by the current government from 19.93 per cent.

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ICBC’s average optional commissions are down to 15 per cent from 15.5 per cent.

“If we can perfect some online services that would reduce the number of transaction in offices, but it’s pretty clear brokers’ offices are here to stay,” Insurance Brokers Association of British Columbia executive director Chuck Byrne said.

A move to online renewals would come with additional costs including web infrastructure, software, and a call centre to support customers. Brokers currently provide customer support in over 900 offices across the province.

“It’s not a zero-sum game where you eliminate the brokers and then everything is free. If you set up an online system people will have difficulties with it, people will have questions,” Eby said.

“We haven’t done the work yet on direct comparisons. We are just plugging holes in the boat.”