The B.C. government is introducing changes to the Insurance Corporation of British Columbia (ICBC) in an effort to make the public auto insurer financially sustainable a week after ICBC forecast that it would lose $1.3 billion by the end of the fiscal year.
Attorney General David Eby said on February 6 that changes taking effect April 1, 2019 include:
•a new limit of $5,500 on pain and suffering for minor injury claims – a type of claim for which the cost has increased 265% since 2000;
•an independent dispute resolution process for certain motor vehicle injury claims with the intention being to reduce legal fees; and
•the first major improvements in accident benefits in 25 years, dramatically increasing the care available for anyone injured in a crash, regardless of fault.
That final major change involves doubling to $300,000 the overall medical care and recovery cost allowance with a change that will be made retroactive to January 1, 2018.
Together, these changes will reduce the amount ICBC spends on legal fees and expenses, according to Eby. He suggested that legal fees consume 24% of ICBC’s budget.
“B.C. drivers are facing possible increases in their premiums of at least $400 if we don’t act to fix ICBC so we are acting,” Eby told the February 6 press conference at the legislature.
Last week, the provincial insurer revealed that it endured a $935-million loss in the nine months that ended on December 31.
Eby called the situation a “financial dumpster fire” and cast blame on the former Liberal government because a 2014 report by Ernst & Young found that ICBC’s finances were trending in a way that was unsustainable and the Liberal government did not introduce changes recommended in the report.
New Liberal leader Andrew Wilkinson retorted that Eby should not be “throwing around blame” but rather accepting responsibility and moving forward.
Undaunted, Eby then took another jab at Wilkinson, saying “Mr. Wilkinson reminds me of a guy who borrowed the family car, drove it into the telephone pole and now says he doesn’t want to play the blame game.”
Some of the changes that Ernst & Young recommended were to have caps on soft-tissue injury claims that resulted from minor accidents, higher insurance for drivers that have been involved in incidents where they were distracted while driving and changes to how much capital the government requires ICBC to have in reserve.
ICBC last week said its “sizeable and significant loss” is further evidence of growing financial pressures that it is under thanks to a rapid increase in the number of crashes occurring across B.C., a surge in claims and massive growth in costs associated with those claims.