Drivers, Passengers, Pedestrians - All Best Beware in BC

Rate hikes by ICBC may not be the only changes the provincial government will allow with regard to auto insurance in British Columbia. We - the motoring public, passengers and pedestrians - need to be wary once again of auto-insurance schemes designed to take away the rights of innocent victims. Such systems are often known as no-fault, threshold or various combinations. Some of the effects of certain schemes are quite simple. They take away the rights of innocent victims to seek justice. They view people as pieces of property rather than as human beings. They make good drivers pay for bad drivers.

Many of us recall the last time the government considered driving away with our rights. We must remain aware of unfair schemes in all forms. They are presented in disguise. Historically, governments and insurance companies alike have tried to sell no-fault concepts by using other terms. To gear up on this agenda, their propaganda points erroneously to lawsuits, fraud, minor soft-tissue injuries and a desire to profit from accidents as the real culprits behind rising costs.

No-fault concepts cannot be dressed up enough to be endorsed by anyone interested in preserving justice for innocent people. Improvements cannot be found if a system eliminates an individual's rights and recourse.

Under a system of thresholds, the threshold is passed once a person exceeds a certain dollar amount in injury costs (monetary threshold) or meets specific definitions of injuries (verbal threshold). Some severe threshold systems require a person to sustain a permanent and serious injury. If they do not, the driver who caused the accident will not be held responsible. Broken bones and serious disfigurement will not pass the threshold. Compensation will not be paid for pain and suffering. Lost wages may not be fully recovered.

A system incorporating deductibles makes matters even worse for innocent victims. If the threshold is cleared, a deductible will be applied. This reduces the award. A few years ago, ICBC pushed for a $25,000 deductible. If implemented, a compensation award of $40,000 would be reduced to $15,000.

Several years ago, opposition to these schemes was voiced far and wide from a variety of sources. The government's push for no-fault insurance was rejected after warnings not only came from more than 200 community groups throughout BC, but also from famed US consumer advocate Ralph Nader, who provided plenty of insight as to the negative effects of systems that seek to eliminate the rights of innocent accident victims.

The current negligence-based system (tort) provides incentives for safety.

No-fault systems do not. The extremely disturbing danger of a no-fault scheme needs to be understood. If a reckless driver causes an accident that kills you or a member of your family, or destroys your ability to have a child or leaves you with a life-altering disability, you cannot hold the driver or their insurance company responsible. True, you can expect to recover some of your lost wages and be compensated for medical expenses and (God forbid) funeral costs, but that may be all.

In a simple world, everyone would agree when it comes to how injured parties are compensated. However, when matters are disputed, important decisions should not be made by insurance companies. They have a vested interest in minimizing claims. The courts do not.

ICBC management, again at the wheel, is not alone in its quest for product reform. This time, the Insurance Bureau of Canada (IBC) is also driving ahead with its goals. IBC continues to push for restrictions and/or denial of court access for individuals. Recently, in Atlantic Canada, IBC campaigned for restrictions on legal rights and access to the courts. In Ontario, IBC wants higher premiums and higher deductibles under that province's no-fault threshold system. Locally, IBC has spoken in general terms of the need for cost-saving reforms.

In the United States, the phenomenon of no-fault has been tried, observed and criticized throughout the past 30 years. At present, 27 states have a tort system. Of the no-fault states, eight have a monetary threshold, five have a verbal threshold and three have a scheme called auto choice, where drivers choose between a tort and a no-fault system. Under the latter, the so-called choice forces drivers who choose the tort option to purchase extra coverage. This unfairly leads some people to select the no-fault system. The entire issue of choice is weakened further by the fact drivers who opt for tort coverage are only permitted to make claims against drivers who choose the tort option. Perversely, drivers who choose no-fault are immune from having a claim made against them.

Data from the US-based National Association of Insurance Commissioners reveals that states with severe verbal thresholds have 30% higher premiums than tort states. The five states with the highest auto insurance rates are under a no-fault system. Driving with the other foot, 7 of the 10 states with the lowest rates feature traditional tort systems.

It is neither a coincidence nor a secret that profit margins for insurance companies are significantly higher in no-fault states.