Update to Salvage Acquisitions — ICBC Buyer Terms & Conditions

January 16, 2017

The Issue: In recent years, the price of salvage has risen beyond the recyclers’ ability to compete on a level playing field. In the mid 1990s, ICBC developed its buyer’s terms and conditions in order to curb many of the illegitimate and illegal activities stemming from the misappropriated use of salvaged vehicles. In recent years, however, ICBC has either expanded their category of buyer or reinterpreted existing policy to expand the sale of salvage to buyers falling outside of these definitions.

In April 2014, ICBC revised its salvage buyer policies, removing policies that were designed as safeguards to prevent the misuse of its buyer policies and to help ensure proper disposal and utilization of salvaged vehicles.

The Impact: The rise in salvage prices has been fuelled by the global economy, a faulty inspection process for rebuilds, curbing, criminal activity, and the relaxation of rules for salvage buyers. Profits realized from the sale of salvage have encouraged ICBC to relax and/or redefine its buyer terms and conditions, further increasing the number of illegitimate buyers and creating an unfair playing field for legitimate operations.

A 2015 study conducted by the BC Auto Recycling Division of the ARA (B-CAR) discovered that recycled parts utilization as a percentage of total parts utilized in insurance claims have been declining in proportion to the availability and access to fair market-value salvage. These declines are directly attributable to corporate policies and a lack of government supervision, enforcement, and regulation. Further declines will ultimately place the future sustainability of the automotive dismantling industry in jeopardy.

In March 2016, an investigation by the Automotive Recyclers Environmental Association (AREA) in conjunction with a New Westminster bylaw officer discovered a number of salvage export operations that were exporting unprocessed ICBC salvage and lending out their bid numbers to unlicensed salvage brokers.

ARA Position: The ARA believes that as a crown corporation, ICBC must concern itself with the impact of its policies on the public good as a whole, not just the bottom line. The ARA continues dialogue with ICBC on these matters and vigorously advocates to government on behalf of the industry and the consumer.

  • The ARA believes that cost-savings from the re-uptake of recycled parts into the system outweigh profits from the uncontrolled sale of salvage.
  • The ARA maintains that as a crown corporation, ICBC is required to demonstrate due diligence by monitoring and scrutinizing its buyer-base in consultation with the industry.
  • In 2015, B-CAR, with the assistance of Meyers, Norris Penny (MNP), conducted a study of salvage buyers polices and its effect upon industry and parts utilization. The study made five important policy recommendations that will help increase parts utilization in the repair process. The ARA supports these recommendations:
  1. Get ICBC’s endorsement for the development and implementation of a recycler quality control certification program.
  2. Earmark specific year, make, and model vehicles for parts utilization or create Allied-only bid-lanes for DPO salvage.
  3. Conduct further research and monitor industry trends.
  4. Ensure all salvage buyers are held to the same environmental standards.
  5. Reinstate salvage buyer policies designed to ensure the responsible use of salvage.
  • In September 2015, Minister Todd Stone announced at the ARA AGM in Kelowna that he had directed an entire review of the industry, including the automotive dismantling sector. Further, Minister Stone announced that he had directed ICBC to engage in dialogue with the ARA and other stakeholders to discuss salvage policies and their impact upon industry. While there has been some limited discussion since the Minister’s announcement, we are still not fully engaged in dialogue with ICBC concerning salvage policy. The ARA supports the Minister’s recommendations, and B-CAR will continue to work with AREA to advocate for greater regulatory