The Insurance Corporation of British Columbia (ICBC) has agreed to pay nearly $13 million to settle two class-action lawsuits that alleged the public auto insurer has been illegally driving up premiums since 1973. However, millions of insured drivers who paid an estimated additional $1 billion in premiums over the decades will receive nothing. Instead, the settlement funds will be directed to charities.
Settlement Details
During a two-day hearing last month, ICBC settled one lawsuit for $12.2 million on behalf of all drivers who have paid for ICBC insurance over the past 53 years. A second lawsuit was settled for $700,000 on behalf of 275 people whose accident benefits fell short of what they were entitled to, according to a B.C. Supreme Court judgment released recently.
Justice Ward Branch called the settlement “fair and reasonable” and noted it ends “this long and difficult fight” that began in 2020. A trial had been set to start in September.
Risks and Challenges
The judge noted that plaintiffs’ lawyers estimated the premiums claim could top out at $300 million, but they assessed their chance of success at only five percent, or about $15 million. If ICBC successfully argued to limit the time period covered, the payout could drop to about $5 million. “Given these risks, $12.2 million is fair and reasonable,” Branch said.
He highlighted that the class-action lawsuit faced “extreme risk” after B.C. passed a law last year designed to “immunize” ICBC from the lawsuit’s argument that the insurer’s payments to B.C. Medical Services Plan amounted to an unconstitutional tax. “The only arguments left available were extremely novel,” and ICBC was likely to apply to have the class-action lawsuits thrown out, he wrote. “I say without reservation that (the plaintiffs’ lawyers) did an excellent job extracting anything from (ICBC), let alone the $12.2 million obtained.”
Why Drivers Get Nothing
$12.2 million divided by the estimated class of 5.6 million drivers—essentially every insured adult in B.C.—works out to an average of $2 each. At a cost of $5 to cut a cheque, or $1.50 for an e-transfer, the settlement would be wiped out even before lawyers are paid. Where payment in any legal case is impossible or impractical, the judge can instead direct funds to a charity that benefits the class.
Charity Allocation
The plaintiffs suggested eight charities, but the judge ruled only two were directly tied to the class: Mothers Against Drunk Driving and Parachute, a charity that works to prevent injuries. Each will receive 50 percent of the charities’ share.
Second Settlement for Accident Victims
The second settlement is for accident victims, with each victim awarded 100 percent of their claim plus $1,000 each for general damages and interest. Branch also viewed this as “clearly fair and reasonable.” The law firm’s website says that settlement totals almost $700,000. If all class members cannot be reached, half of the remaining amounts will go to ICBC’s community grants programs and half to the Law Foundation of B.C., both of which aim to support access to justice.
