Les Leyne: Crash rate was underplayed in Eby’s story

Les Leyne mugshot genericThere are two concurrent story lines running under the NDP-governed Insurance Corp. of B.C., but they lead in different directions.

Attorney General David Eby’s favourite one is about how the previous B.C. Liberal government mismanaged the corporation, ignored looming problems, raided its accounts and let everything drift into the red to the point where a crisis deficit emerged. It forced Eby to come up with the radical overhaul that kicked into effect this month.

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The second one is about a dramatic increase in crashes and a jump in the number of big, expensive claims that pushed the public insurer deep into the red.

The numbers bear out the second version. But any new government’s first preference is to blame everything on the previous government. That has been a standard play since the beginning of time.

Using that gambit to the extent that Eby has, though, minimizes something important. ICBC’s billion-dollar deficit has as much to do with its own customers — meaning us — as it does the previous government.

An information dump this week in response to a freedom-of-information request sheds a bit of light on the development of the two story lines, and how they conflict with each other at a few points.

It’s a long email thread from last year showing some of the strategizing that went into designing Eby’s response to ICBC’s third-quarter results that showed how bad its books were looking.

The “key messages” for the minister to deliver were: “Years of bad decisions and mismanagement by the former government have undermined ICBC’s ability to deliver low-cost insurance.

“We never expected to find this level of mismanagement.”

Also listed was the fact the Liberals got recommendations years ago that would have saved hundreds of millions, but they buried them and did nothing.

The overall communication plan was to go heavy on the politics and stress how dire the crisis was. One point suggested $5,400 rate hikes were coming if nothing was done.

Staff also put together a Q and A document for Eby to use. It cast a different light.

Answering why the losses were so high, the briefing note says: “ICBC has informed us that this dramatic increase is driven by two core factors: the emergence of many large and extremely costly claims,” and the fact they were closing at a slower rate, despite significant staffing increases to deal with the extra volume.

ICBC was dealing with an unprecedented 80 per cent growth in large-loss (over $200,000) claims.

The steady overall rise in claims was an established trend by then, and wasn’t considered a new issue. But it is a huge factor — 900 every day, compounded by a 16 per cent jump in the number of injury claims stemming from those increasing crashes.

It’s an open question how much control a government — any government — has over ICBC. Liberals do deserve a generous share of the blame for not seeing the crisis looming on the horizon and not setting ICBC up to brace for it.

Back when the corporation had excess revenue, the Liberals scooped it up for their own use. And they did suppress a consultant’s ideas on how to fix things.

Still, the basic arithmetic accepted by the NDP suggests that it’s B.C. drivers who drove the corporation into the red.

An astronomically high crash rate and accompanying claims increase are going to drive any public insurer into a crisis, no matter what government is nominally in charge of the corporation.

Eby’s “mismanagement” line, whether by the Liberals or by ICBC itself, also didn’t stand up when his ministry’s review of one specific aspect was released two months ago.

His lawyers looked at settlement and litigation practices to see if ICBC was making inappropriately low offers, or taking unnecessary cases to trial and driving up costs.

No support for those concerns was found.

“ICBC’s claims-management practices are generally sensible and well executed.”

No minister responsible for ICBC is going to tell B.C. drivers that if they’re looking to blame someone for premium increases, all they have to do is check the rearview mirror.

It’s safer politically to blame the previous government, so that’s the course Eby emphasized.


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