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The province of British Columbia is lagging behind others in its auto insurance offerings for part-time taxi drivers and ridesharing operators, which has stifled the availability of apps like Uber and Lyft that are popular in many cities across the country.
A new Hara Associates report released by BC’s Ministry of Transportation and Infrastructure, underscored the need for insurance that makes sense for taxi and rideshare drivers, pointing out that in Vancouver, taxi insurance costs as much as $32,000 a year before the safe driving discount, and the rate structure doesn’t currently make allowances for part-time taxis. At the same time, rideshare operators, known also as drivers for transportation network companies (TNCs), would benefit from insurance rates that are based on kilometres driven during periods when a vehicle is used for commercial purposes.
The problem, says the Insurance Bureau of Canada, is that while the Insurance Corporation of BC (ICBC) contributed insight to the report and has identified solutions that work in Ontario and Alberta that could work in BC with regulatory and legislative changes, the crown corporation doesn’t have anything on the table yet.
“ICBC hasn’t already come up with a product that they’re just waiting on regulatory changes to enable. It still sounds like they’re trying to determine what a workable approach would be in BC,” said IBC Pacific vice-president Aaron Sutherland in an interview with Insurance Business. “You would think having this much time to work on it, they would have the product, they’d have it ready to go, and they’d simply be waiting on the legislation to enable it.”
This year has been one of change for the ICBC already, with calls for reform resulting in proposed changes to its auto insurance system potentially coming into effect in the fall. The lack of suitable insurance for the ridesharing industry mirrors issues that have marred the crown corporation for years.
“That speaks to the broader challenge we face here in BC, which is there is a complete lack of innovation in our auto insurance marketplace. We’ve seen very little changes,” said Sutherland. “Auto insurance in BC is very different from the rest of this country and for drivers here – not just in having choice and who’s providing it to them, but having choice in the different products that are available to them.”
Usage-based insurance and pay-per-kilometre options, similar to what CAA launched in Ontario this summer, are not available in BC, and it’s just another indicator of how a monopoly can hinder innovation and impact consumers and drivers who ultimately pay the price, according to Sutherland. With private insurers ready to launch the right products for this fledging rideshare industry, IBC continues to emphasize the need for competition in BC.
“I think the best way you can encourage innovation in any marketplace is opening it up to competition. A competitive environment is the best way we can ensure that any business is delivering the best product at the best possible price and constantly revaluating itself to better meet its customers’ needs. Auto insurance is no exception to that rule,” said Sutherland. “Unless we see a competitive marketplace introduced here in British Columbia, it’s unlikely that we’re ever going to see the types of innovations that exist in the rest of the country.”
