Les Leyne: Don’t expect a pandemic rebate from ICBC — it’s flat broke

Other insurance companies in Canada are offering rebates to help customers through the pandemic, so why can’t ICBC do the same? Don’t be ridiculous. It was already flat broke before COVID-19 hit. Now it’s even further in the red.

But Attorney General David Eby, minister responsible, is still painting a glorious picture of the big turnaround. There will come a day, in the sweet by and by, when all the reforms have clicked into gear. “Dumpster fire” — Eby’s favourite description of the outfit — will fade from memory. The new buzzphrases will be “enhanced care” and “rate cuts” and even … surplus.

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All the ambulance-chasing lawyers will be banished, because almost no one will have to fight ICBC in court. So the corporation will be awash in money. And it won’t need all the money because crashes will be reduced by safety measures. So it will give some of it back to customers. Rate freezes and rate cuts, guaranteed. Rebate cheques for everyone to cover the transition period. Lifetime benefits to victims who need them.

“The trends are very hopeful that ICBC will be seeing some sort of financial benefit from reduced collisions,” he told the legislature.

It’s going to be awesome.

But it was never going to be easy getting to that happy place, and it’s even harder now.

Eby was asked about pandemic ICBC rebates like the ones Ontario and Manitoba drivers are getting and his answer boiled down to: Not a chance. There’s no safety net.

“The availability of rebates or any other kind of initiative with a surplus depends on there being a surplus… Those reserves are not in place.”

ICBC reported earlier in the pandemic that costs were down $158 million, but premium revenue was down $283 million, so COVID-19 is costing more than it’s saving.

He said people are generally reducing their coverage, opting for higher deductibles and lower third-party coverage. They’re also shifting rate classes, from commuter to pleasure-only, because their jobs have shrunk or have disappeared.

The much bigger impact is likely on ICBC’s investment portfolio. It may be broke, but it still has about $19 billion on hand in its mandatory portfolio. What the virus did to that won’t be known for another month, when the government’s public accounts reckoning is released. About a quarter of it is in equities, and they took a huge hit in the spring.

ICBC didn’t get mentioned in Finance Minister Carole James’ economic update this month that projected a $12.5-billion deficit due to the virus. That was in contrast to her first full budget in 2018, when it was happily highlighted on the first page as a Liberal-inspired disaster that was dragging government down.

Eby noted a caution that the B.C. Utilities Commission issued a month ago about ICBC’s books. He cited it as a reason why there will be no rebates. But it says a lot more than that.

The agency is independent — unless ordered to do something by cabinet — and regulates ICBC.

It wrote about the rate freeze set for next spring that was ordered by cabinet earlier this year.

Given it was an order, the BCUC noted that it didn’t review that for “any regulatory or economic justification.”

But it expressed concerns about the overall financial health and solvency. The commission is supposed to ensure ICBC brings in enough money to meet a minimum standard for reserves, the “minimum capital test.”

But that was suspended early in the NDP’s term. Now ICBC is at 6.1 per cent of that capital test, when it’s supposed to be at 100 per cent. The utilities commission reiterated concerns about the shortage. “There is no capital available to backstop further losses. … Further capital injections from sources outside the basic insurance system, significant cost reductions or further insurance reform amendments to reduce costs may be necessary.”

The BCUC acknowledged the major overhaul underway to produce a brand-new model of no-fault insurance. They’re forecast to save $1.5 billion a year. But “it is unclear whether they will be sufficient to mitigate the risk of such a low minimum capital test ratio.”

So ICBC will run two different systems for three years or more transitioning to the promised land, while B.C. hopefully transitions out of the viral nightmare at the same time.


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