The B.C. government is still struggling to put out an ongoing “dumpster fire” at ICBC. As part of second-quarter financial results, the public insurer is forecasting a larger than expected loss of $890 million this fiscal year.
ICBC has posted a net loss of $582 million for the first six months of the current fiscal year.
“This financial situation reflects the mounting pressure ICBC is under from the rising number and cost of claims,” Attorney General David Eby said in a release.
“The primary reasons are higher bodily injury costs, as well as claims taking longer to resolve, which often result in higher claims costs.”
ICBC posted a loss of $1.3 billion last fiscal year.
The provincial government is in the midst of attempting to clean-up the financial mess at ICBC. The government introduced legislation that puts caps on the pay outs from claims for soft tissue injuries and brain injuries like concussions.
Those changes are expected to lead to net savings of $1 billion annually. However, ICBC won’t see these savings until after most of the reforms take effect, starting April 1, 2019.
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“Given this situation, we are looking for ways to accelerate and add to our efforts to solve the financial problems at ICBC,” Eby said. “It is now clear that this government needs to look for even more ways – beyond what is already planned – to further reduce the escalating cost of claims.”
One of the biggest challenges at ICBC is a growing trend toward plaintiff lawyers strategically building the value of the claim. Eby says the trends have become more severe and since March 2017 the dollar value of settlements demanded by plaintiff lawyers for litigated files increased by 27 per cent.
WATCH HERE: Province releases details of ICBC overhaul
The growing losses at ICBC has set the stage for rate increases to the public. The insurer will be submitting a basic rate application next month.
“While our current financial pressures are clearly serious, they have been caused by an auto insurance system which has long been in need of substantial modernization – something that is now, at last, happening,” reads a statement from ICBC. “The growing claims costs pressures ICBC is facing will also need to be addressed with the next basic rate application which is due with the British Columbia Utilities Commission by Dec. 15.”
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