What needs to happen to keep ICBC from collapsing?

It’s no secret that B.C.’s public insurer is facing major hurdles, with some reports suggesting ICBC is verging on insolvency.

Drivers are facing a possible 30 per cent increase in insurance premiums, and one former government senior manager says drastic action is needed if the corporation is to stay afloat.

LISTEN: Richard McCandless on the future of ICBC

Growing deficits

“Well, it’s on a downward slope financially, and the slope is getting steeper each year,” Richard McCandless told Jon McComb on CKNW’s the Jon McComb Show.

It’s a complex problem, but at the end of the day McCandless said the issue boils down to the fact that ICBC is spending more money than it’s bringing in.

McCandless said that’s due to spiraling claims costs, an issue B.C. isn’t alone in facing.

But the issue was exacerbated by the previous BC Liberal government holding premiums at an artificially low rate to appease drivers, he said, which has led to increased deficits in recent years.

WATCH: Most drivers think someone else is at fault, ICBC driving study shows

2:02 Most drivers think someone else is at fault, ICBC driving study shows

The NDP has accused the Liberals of draining ICBC’s coffers by withdrawing $1.2 billion in “excess capital” from the company, while shifting another $1.4 billion from the corporation’s profitable optional insurance program to cover the mandatory basic insurance side, which loses money.

But McCandless likened that money to funds kept in a savings account, and said even if it were still there, with ICBC in a structural deficit position it would burn through the cash quickly.

“You can stand by the ocean and order the tide not to come in… but it’s coming in,” he said.

What’s more, McCandless said that while the optional side of the business used to be profitable, is now losing money as well.

He said injury climbed by about 11 per cent last year, and property damage costs soared as high as 21 per cent.

“That’s kind of wiped out a lot, if not all of the flexibility anybody might have had with optional side which used to make money. But now they’re in a deficit position.”

Changes needed

There won’t be any single or easy solution out of ICBC’s troubles, McCandless said.

“The problem with ICBC is that their revenues, mainly from premiums aren’t keeping up with their cost increases. You’ve either got to increase the revenue — we’re back to rates again — or reduce the expenditures.”

If ICBC went the rates route alone, McCandless said they’d need to go up much higher than the 30 per cent figure quoted in a recent Ernst & Young audit of the insurer – something that would be politically unpalatable to the government.

He said alternately, B.C. will have to look at some other Canadian jurisdictions for a fix.

WATCH: New questions about ICBC

1:52 New questions about ICBC

McCandless points to Saskatchewan and Manitoba – both provinces that use a mandatory public insurer similar to ICBC, and which have the lowest rates in Canada – as examples.

Both have optional no-fault insurance, which blocks drivers from suing for pain and suffering.

“Other provinces have also capped the pain and suffering for minor damages,” he said, pointing to Ontario which has $30,000 deductible in that area, and Alberta which has a $5,000 cap on minor claims such as whiplash.

McCandless said the province may also have to look at getting costs currently shouldered by the Crown corporation off of its books.

Those could include things like a 25 per cent discount offered to seniors, or driver licensing services, traffic enforcement and road safety initiatives that he argues should be government responsibilities, not ratepayers.

The BC NDP government has ruled out bringing in photo radar or no-fault insurance as fixes for ICBC, but has instructed the corporation to look at technological initiatives to curb distracted driving.

The previous BC Liberal government announced last year that it would stop insuring luxury vehicles in an effort to cut costs.