With ICBC deep in red ink, the provincial government is changing the rules about how much cash the beleaguered public insurer needs to keep on hand.
The move, which Attorney General David Eby calls temporary, could leave taxpayers on the hook in the event of a major disaster.
LISTEN: Will taxpayers have to bail out ICBC?
“It is a crisis situation, I’m trying to communicate that to people as best as possible,” said Eby.
Under current regulations ICBC is required, at minimum, to have enough money in the bank to cover 100 per cent outstanding claims. Failure to meet that threshold limits what the insurer can do, including going to the B.C. Utilities Commission (BCUC) for a rate hearing.
WATCH: B.C. to cap ICBC pain and suffering payouts
Under the changed rules, Eby said the province would act to backstop ICBC if it was suddenly flooded with claims — say, in the event of an earthquake or flood.
The NDP is laying blame for the move on the previous B.C. Liberal government, which it accuses of pulling upwards of $1.6 billion from ICBC’s capital reserves to keep insurance rates low and to balance the provincial budget.
Eby said the lowered reserve threshold will stay in place while the province implements a suite of measures aimed at putting the insurer back on solid footing. Those include a $5,000 cap on minor injury claims and proposed changes to insurance rates targeting bad drivers.
Even so, the province forecasts it will be at least three years before ICBC is back in the black.
WATCH: ICBC faces huge losses
Retired senior civil servant and ICBC expert Richard McCandless said the move could be good news for drivers, as the BCUC won’t be forced to demand rate hikes to meet the reserve minimum.
“Instead of jacking the rates to preserve the capital, they are depleting the capital and having lower rate increases,” said McCandless.
“The commission would be forced to set much higher rates, this delivers the commission of that obligation to ensure a healthy capital reserve.”
LISTEN: B.C. suspends ICBC’s capital reserve minimum
Nonetheless, the province’s move to step in and act as final guarantor of ICBC claims has raised the spectre of a possible bailout of the insurer.
Eby said a massive payout of public dollars would only occur in an extreme case, and took pains to stress that ICBC remains solvent.
“Already ICBC’s finances have had a major impact on taxpayers. A $1.3-billion impact this year, a $1-billion impact last year,” he said.
“This is already impacting taxpayers, which is why this is so urgent.”
-With files from Emily Lazatin