The B.C. government is vowing to put out an ongoing “dumpster fire” at ICBC. Attorney General David Eby says the previous government’s mismanagement of the public insurer is to blame for a nearly $1 billion loss at ICBC over the first nine months of the year.
But the government is not planning on a financial bailout for the insurer.
“The reality is we could put a billion dollars into ICBC now, but we would have to put a billion dollars in next year and the following year,” said Eby at a press conference in Vancouver Monday morning. “We are not going to do short-term fixes for a single year, we are looking at long-term fixes.”
Those fixes include activating red light cameras full time and addressing dangerous intersections. The province is also looking at a cap on payouts for minor injuries, like soft tissue, reducing auto body repair costs and increasing deductibles.
ICBC’s net claims costs for the first nine months of the current fiscal year totalled $4.25 billion.
But Eby says it is too early to determine how much rates may go up for drivers.
WATCH: What will this financial loss mean for ICBC rates?
“The information I received about the current state is very fresh,” said Eby. “Any response to this, which could include what rates will be, has yet to be determined. It is my very clear intention that rates will be affordable and we will address that by looking at systemic issues at ICBC.”
Costs going up
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The insurer has seen an 80 per cent growth in large loss claims, those with an average cost of $450,000 a claim, over the last 12 months. Some of those cases, dating back as far as 2010, were originally presented as minor injury claims.
The length of time to deal with claims is also going up. There are more claims involving lawyers and they take longer to settle and the longer it takes, the more expensive it is.
ICBC is projecting a $1.3 billion loss for the fiscal year. The public insurer posted a $935 million loss for the first three quarters of the year.
“The growing financial pressures we are under from the rapid increase in the number of crashes occurring across B.C., the surge in claims and the massive growth in the costs of those claims,” said ICBC in a statement. “The number of crashes occurring across B.C. is continuing to escalate year-after-year.”
The provincial government has ruled out a few possible solutions, including privatizing the insurance company and no-fault insurance. Eby says in Ontario people pay more for car insurance even though the industry is privatized.
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BC Attorney General calls ICBC ‘financial dumpster fire’ -
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ICBC CEO compensation going up
The government is also looking at executive compensation at ICBC. Eby has asked ICBC board chair Joy MacPhail to look at both the payment and bonus structure.
“Obviously there is a very serious problem at ICBC and bonuses are not appropriate,” said Eby.
In the 2016/17 fiscal year, seven members of the executive make more than $350,000 in total compensation. That tops out with CEO Mark Blutcher, who made $479,156 in total compensation in the 2016/17 fiscal year.
ICBC could also look at its own assets. The insurer’s headquarters in North Vancouver was recently valued at by B.C. Assessment at a total of $79,822,000, with almost $64 million of that just the land value.
B.C. vs. other provinces
So how do B.C.’s vehicle insurance premiums compare to other provinces?
Statistics from 2017 show that, on average, Alberta vehicle insurance premiums were $122 a month or just under $1,500 a year.
Ontario auto insurance premiums average around $161 a month, said to be the highest in the country.
Manitoba drivers pay on average just under $1,600 dollars a year.
Aaron Sutherland with the Insurance Bureau of Canada says there’s no reason drivers in B.C. can’t have competition and choice either.
“That doesn’t make sense, other Canadians provinces, drivers are able to shop around and see if they can save money,” said Sutherland.
He said the average B.C. driver pays about $1,550 for vehicle insurance and on top of the cost of gas. B.C. is considered the most expensive province to own and operate a car.
~With files from Janet Brown
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