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AUTO COLLISION REPAIR INDUSTRY – ICBC PRICING MODEL COMPETITIVENESS (2023)

2023
Finance & Taxation
Regulation

Issue

B.C.’s collision industry is the lowest paid of the Western Crown insured provinces B.C.’s collision repair providers post the lowest earnings. In comparison, Saskatchewan providers report nearly double the earnings of providers in B.C. This is a situation created by ICBC. using a pricing model which is not at all competitive with other sectors of the auto industry, nor competitive with other regions in the country.

To create an environment where the collision repair industry is financially viable and comparable to its Canadian industry peers, the pricing model must be revisited.

 

Background

The collision repair industry in B.C. is currently in a state of financial decline. The industry is dependent on ICBC. for the bulk of their financial compensation as the large majority of their work is derived from insurance claims. After its most recent increase, ICBC. currently pay a shop rate of $82.68 per hour to collision repair providers. This represents an increase of only 18% (not factoring in CPI) since 2010, when the approved shop rate was $70.00 per hour. The consumer price index has risen by 29% over that same period of time, representing a net decline in the actual rate paid of 11%.

Comparatively, the current rate for mechanical repair is between $115 and $130 per hour, with some dealerships charging as much as $155 per hour. This is a disparate difference and one that is sensitive for collision repair providers. The inability to be compensated similarly to mechanical repair providers severely impacts profitability.

ICBC requires all accredited collision repair centres to keep up to date with proper facilities, bylaws, building codes and Provincial and Federal Legislation. Additionally, all repair technicians must stay current with all equipment and technique advances. Technicians must be adequately trained and educated, an ongoing process. Costs keep rising, but rates continue to lag behind.

Other increasing costs include: property tax increases, shop insurance increases, rising property values resulting in higher lease costs, utility cost increases, wage increases, technology software and hardware cost increases.

Industry recommendations include:

  1. Implement a plan to adjust the door rate to $130 per hour over a 3-year period. Year one = $100. Year two = $117. Year three = $130.
  2. Set a base time allowance for researching and writing all estimates at 2.5 hours.
  3. Adjust the time allowance to pre-scan to .7 hours (in line with Saskatchewan Government Insurance.
  4. Set a service time plan allowance of .8 hours for all body repair claims (OEM research).

Year after year, ICBC reports record profits , going so far as to issue rebates to their customers. The fact that ICBC. consistently reports surplus, demonstrates the flexibility to increase shop rates for collision repair providers.

In order for B.C.’s collision repair industry to be sustainable, to provide jobs and support their communities, the pricing model must be competitive.

 

THE CHAMBER RECOMMENDS

That the Provincial Government:

  1. Review the ICBC. pricing model paid to B.C. auto collision repair, auto glass and towing industry to ensure it is competitive.
  2. Seek input from the auto collision repair, auto glass and towing industry in undertaking this review.