How do you solve a problem like ICBC?

Click to play video: 'ICBC faces huge losses'
ICBC faces huge losses
WATCH: ICBC posted a nearly $1 billion loss in the first nine months of its fiscal year. Ted Chernecki reports on what's to blame, and how it might affect drivers – Jan 30, 2018

The provincial government is staring directly at more than $1 billion in losses at ICBC for the current fiscal year.

And the BC NDP government is trying to avoid raising basic vehicle insurance rates for drivers by a massive margin.

“If we don’t take action B.C. drivers will face a $400 premium hike just to get ICBC to break even. Obviously British Columbians can’t afford that and we won’t let it happen,” said B.C. Attorney General David Eby.

A hefty hike like that would be political dynamite that could explode any chance the BC NDP has of staying in power. But there are other options, with varying degrees of potential public support and financial effectiveness.

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Making the roads safer

Safer roads mean fewer crashes. Fewer crashes means less ICBC claims and the savings that could come with it. Eby said the province is already investing in this. That includes activating red light cameras 24 hours per day to catch risky driving behaviour in intersections.

Click to play video: 'ICBC and police ramp up efforts to crackdown on distracted drivers'
ICBC and police ramp up efforts to crackdown on distracted drivers

Auto body shop crackdown

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The province said payments to auto body shops for repairs have gone up 30 per cent in the last two years. Eby said the province will make a decision soon on whether to cap what auto body shops can charge.

Increasing rates for high-risk drivers

The government has committed to putting forward legislation this year that would increase the rates for high risk drivers, while lowering the basic insurance rate of drivers with clean records. There are no details yet on how much more a driver would have to pay in insurance if they were involved in multiple crashes. The province is also looking at the possibility of increasing deductibles for higher risk drivers.

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Executive wages

The government is looking it can save money by cracking down on executive compensation. Eby has asked ICBC board chair Joy MacPhail to look at payments and bonus structures.

“Obviously there is a very serious problem at ICBC and bonuses are not appropriate,” Eby said.

READ MORE: Critic cries foul over ICBC’s executive’s salaries

In the 2016/17 fiscal year, seven members of the executive made more than $350,000 in total compensation. That topped out with CEO Mark Blutcher, who made $479,156 in total compensation in that time.

Privatize the industry

This is one of the most contentious issues and it’s something the NDP is already ruling out. But Kris Sims from the Canadian Taxpayers Federation said there’s a “Goldlilocks solution,” which would be turning the public insurer into a co-op owned by those that choose ICBC for their insurance.

“We think that what needs to happen is fundamental change. Change ICBC into a co-op owned by B.C. drivers that choose to stick with it and then open that co-op up to other competition from other companies. And then B.C. drivers can shop around for better rates,” Sims said.

Caps for soft tissue injuries

British Columbia is the only province that doesn’t cap payouts for soft body injuries endured by those involved in vehicle crashes. The NDP government is moving towars a cap, but it will be nowhere near enough to save more than $1 billion per year.

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“There is some money to be saved there, but not enough to close the gap between revenue and expenditures,” said former public servant and ICBC expert Richard McCandless.

But there are concerns about whether those hurt in a crash will be able to obtain the services they need with a cap in place.

“We don’t think limiting someone’s ability to sue for damages if they are injured will be enough or the right thing to do,” said Sims.

No fault insurance

The B.C government has also ruled out no fault insurance. Eby says that there is no proof the system works at reducing rates and that there would be prohibitively high administrative costs linked to the change. But some experts aren’t so sure.

“Saskatchewan and Manitoba have a no fault system and their basic rates are 20 to 30 per cent lower than ours,” said McCandless. “No fault saves a lot of time and a lot of money for a lot of people.”

Click to play video: 'ICBC to stop insuring high-end cars'
ICBC to stop insuring high-end cars

Expensive car crackdown

The previous BC Liberal government changed the rules so that personal vehicles selling for more than $150,000 have to be insured privately. The BC NDP government could lower that threshold in order to curb the rising costs of fixing expensive cars.

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Lawyer costs

Legal costs are among the biggest expenses associated with ICBC settlements. ICBC commissioned an independent report by Ernst & Young which found that New South Wales and Queensland in Australia put tighter restrictions on legal fees. The claim costs went down 25 per cent a year after the change.

In Ireland, motor insurance premiums fell by 16 per cent in the two years after reforms were implemented.

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