ICBC documents show that insurance brokers can receive a commission of nearly 20% on optional insurance packages.
Global News has obtained a copy of the 2019 Broker Compensation Plan which outlines a fee structure ranging from the basic premium of 3.11% for unreduced drivers to 19.93% for drivers receiving the most discount. high.
The public insurer pays a higher commission rate for the best drivers because these pose a lower risk for ICBC.
ICBC has not provided figures on the number of drivers benefiting from optional insurance benefiting from the maximum reduction.
The provincial government is in the process of reorganizing ICBC and the public insurer needs to "update the compensation structure of the brokers".
"ICBC intends to reflect as much as possible the current compensation structure to maintain the predictability of brokers' revenues during this period of significant change," said a letter to Autoplan brokers.
There is a substantial difference between the amount of commissions paid by insurance brokers of basic insurance compared to optional insurance. Optional insurance commissions are approximately $ 334 million annually, while total basic insurance is close to $ 100 million.
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Each time you renew your basic insurance, the broker receives $ 13.72. For new insurance plans, the broker receives a commission of $ 14.83.
Due to competition with other insurance companies for optional insurance, ICBC pays brokers an average of about 15% on a renewal or a new plan. In the case of an optional insurance bill of $ 800, brokers can earn $ 120.
"Transactions and renewals, among others, bring many complexities," said Chuck Byrne, Executive Director of the Insurance Brokers Association of British Columbia. "In the end, brokers face a great deal of complexity, for which they are not properly paid."
"Overall, it's a very good system that works extremely well."
Last year, auto insurance brokers charged ICBC $ 434 million in commissions. Broker fees include staff, training, brokers and various other expenses. The province's 902 brokers billed 33% more in 2017-18 than in 2011.
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The public insurer lost $ 1.3 billion last year and expects a loss of more than $ 800 million this fiscal year.
"We really appreciate the continued strong working relationship between ICBC brokers and Autoplan," says Jonathan Hoey, director of insurance sales and broker governance.
"I sincerely thank you for your continued commitment to our partnership and to our customers through the most important changes in our history."
Two important changes are underway.
As of April 1, soft tissue injuries will be capped and ICBC will limit the number of lawyers that can be paid. The change also includes an improvement in the type of services and treatment that victims of an accident may receive. The changes should allow ICBC to save $ 1 billion a year.
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The province also requires fewer good drivers and more and more bad drivers. These changes will come into effect on September 1 and will create a definition of what constitutes both a good and a bad driver. These changes should have no impact on revenues, but will change the broker commission structure.
"We intend to consult brokers on this new structure from the beginning of 2019," reads the letter.
In addition to the fee structure, the internal documents also indicate other ways in which brokers can receive a payment from ICBC.
If a broker registers a driver in a payment plan, ICBC pays him $ 8.50. Any debt recovery of more than $ 25 by ICBC equates to $ 7 for the broker and a collection of motor vehicle receivables, including unpaid bills over $ 25, means $ 8 for the broker.
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Each new license plate sold represents $ 14.82 for the broker and $ 5 more if it is a BBC. plate of parks.
"The fee structure is set by the government, by ICBC," said Byrne. "You talk about millions of transactions, which makes it a big number. But when you look at the work of the brokers and the retail discussion with the client, it works pretty well.
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