Is the ICBC's foray into ridesharing a risk to consumers?

Is the ICBC's foray into ridesharing a risk to consumers? | Insurance Business

Is the ICBC

Ridesharing services have finally been given the green light in British Columbia. Last week, the provincial government of BC announced new regulations for transportation network companies like Uber and Lyft, which included insurance requirements for ridesharing drivers.

Under the new regulations, which are set to come into effect in September, ridesharing drivers will have to secure insurance coverage through the Insurance Corporation of British Columbia (ICBC). They will have to purchase a blanket, per-kilometre ridesharing insurance product that includes compulsory third-party liability and accident benefits. The insurance will kick into play only when the driver is offering ride-hailing services. For the rest of the time, the driver’s own basic vehicle insurance – also provided by the ICBC – takes effect.

Aaron Sutherland, Pacific vice president at the Insurance Bureau of Canada (IBC), said BC’s new ridesharing regulations are very similar to the systems already set up in other provinces. The one key difference, according to Sutherland, is the fact that ridesharing operators in BC will not have the ability to shop around for their insurance needs. They must use the state-mandated option available via the ICBC.

“In other provinces, the governments and regulators set out and mandate what type of insurance has to be purchased by ridesharing operators and then the ridesharing firms can shop around the different insurance providers to find the best product, at the best price, which meets those government mandates,” said Sutherland. “In BC, they’re only going to have one choice – the ICBC. At the IBC, we think all drivers (everyday drivers and ridesharing drivers) should have a choice and should be able to shop around for savings and for products that best meet their needs.”

The ICBC has released specifics for its new rideshare insurance program, which includes 10-years of proposed rate increases between September 16, 2019 and September 01, 2028. Sutherland said these increases are likely down to the fact that the ICBC has recently lost money insuring the taxi industry, and therefore “will be phasing in a more appropriate rate in order to return that product line to solvency,” he said.

“When you actually dive into the regulations, the effective rate they’re going to charge per kilometre for ridesharing drivers in BC is going to increase each and every year until 2028,” Sutherland told Insurance Business. “It’s always a concern that tax-payers might be left on the hook because of the challenges in BC’s auto insurance system. As there is a real risk to taxpayers should ICBC ultimately lose money insuring the ridesharing industry, it begs the question as to why ICBC is the one providing this coverage as opposed to the private sector, as is done in virtually every other city with ridesharing services.”