INSURANCE CORPORATION OF BC – ISSUES ARISING OUT OF ITS RELATIONSHIP AS THE MONOPOLY REGULATOR WITH THE COLLISION REPAIR INDUSTRY (2006)

The Insurance Corporation of British Columbia (ICBC) describes itself as a provincial Crown Corporation established in 1973 to provide universal auto insurance to BC motorists. In addition, the Corporation is responsible for driver licensing, vehicle registration and licensing.

All motorists are required to buy a basic package of ICBC Autoplan insurance that provides coverage for third party legal liability protection, accident benefits, underinsured motorist protection, hit-and-run and uninsured motorist’s protection and inverse liability.

ICBC also competes with other automobile insurance companies by offering extended third-party legal liability and other optional insurance coverage such as collision and comprehensive coverage.

Although their preamble on their website does not mention it, ICBC also regulates the collision repair industry in BC. It is responsible for creating and administering the criteria by which companies must obtain the necessary accreditation to function competitively in the marketplace. Issues around ICBC’s relationships with individual businesses in this regard have suggested there are both policy and procedural problems which need to be addressed.

ICBC is seen by many small independent automotive businesses as being inconsistent in the application of important accreditation and performance measurement processes. Overall there is a concern that ICBC appears to favour the larger operators, many of which are chain shops.

A summary of the most significant problems identified is as follows:

At a Surrey Chamber of Commerce sectoral meeting held in February 2006, business operators characterized the interface, particularly with regard to resolving disputes, between ICBC and the Auto Collision industry, as being inconsistent and unpredictable due to a lack of reference to any written procedures.

ICBC managers appeared unable to reference formal procedures to support their determinations and decisions. Decisions therefore appear frequently to be arrived at through personality influenced subjective processes of individual managers.

A number of businesses report that ICBC managers have instructed businesses verbally to take actions not supported by any written procedure. ICBC appears to be unaccountable.

There is clear evidence that the Collision Repair Industry Agreement’s (CRIA) performance measures are not understood by the industry and that senior members in the industry are unable to fully explain the basis for the extremely important Modified Average Repair Cost (mARC) measurement. A detailed written explanation of the mARC measurements and the basis and significance of published values is inadequate. This challenges the belief that ICBC have any meaningful procedures supporting the whole process. This is despite the fact that the Surrey Chamber has requested on behalf of their “Express” program members copies of these procedures on a number of occasions.

There is a belief in the industry that the mARC measurement and its use to reward those who achieve the required performance levels will inevitably result in lower quality repairs.
Despite clear statements from ICBC senior managers, including the President that ICBC does not steer work, there is still considerable evidence to support the claim that clients are effectively being steered to specific group of repairers (ie. Express Shops).

The accreditation conditions that ICBC places on accredited shops and the measurements placed on these businesses effectively compels repair shops to use aftermarket parts rather than OEM (Original Equipment Manufacturer) parts. The information that aftermarket parts rather than OEM parts have been used in a repair is not disclosed to customers. The safety and warranty implications for the customer are thought to be significant and well documented in car manufacturer’s literature.

THE CHAMBER RECOMMENDS

That the Provincial Government establish an independent task force to review the procedures governing the relationship between ICBC and its managers and businesses in the collision repair industry. Such a review should ensure that all interactions are based on clear, readily available and objective procedures.