ICBC is up a creek, and the NDP has chucked away two of the paddles it might have used. The cost of settling minor claims for car crashes has risen 365 per cent since 2000. Even though B.C.’s insurance premiums are among the highest in Canada, the gap between the premiums collected and the claims paid is $560 million a year, and by 2019, it is expected to be $1.1 billion.
The situation merits the description of a “grave financial crisis.” Accounting firm Ernst and Young delivered a 203-page report that predicts drivers could see average premium increases of 30 per cent by 2019, if nothing is done and current trends continue.
That’s a whopping bill, but the new government has ruled out closing the gap by bringing back photo radar and switching to no-fault insurance.
In the 1990s, a previous NDP government set up photo radar, and it was unpopular enough with many drivers that B.C. Liberal leader Gordon Campbell campaigned on getting rid of the program. When his party won power in 2001, it kept the promise.
The report suggested bringing back photo radar, which it said could reduce serious and fatal crashes by more than a third, but new Attorney General David Eby nixed that idea.
“If we’ve heard one message from British Columbians, it’s that they don’t agree with the idea of photo radar,” Eby said. “They find it unfair and an old technology and one that makes them question the administration of justice generally in the province.”
If that was the one message he heard from British Columbians, he cannot have been listening very carefully. Or he was listening only to the British Columbians who get a lot of speeding tickets.
Eby also said the government won’t go to no-fault insurance, which curtails a person’s right to sue. The report had suggested a modified form.
Public opinion generally trends against no-fault insurance, because it downplays the element of blame, and limits the right to sue for damages. On the other hand, Ernst and Young found that 24 per cent of ICBC’s costs go to pay legal bills — far more than in other provinces.
With Eby prematurely closing the door on this and other options, ICBC’s situation is dire. As things stand, the only apparent solutions left are to raise premiums, cap payouts for claims such as pain and suffering, or both.
However, there is one important cost on ICBC’s books that is left over from the B.C. Liberals: the $1.2 billion the Liberal government took from profits from the optional insurance side of ICBC since 2010.
B.C. Liberal MLA Andrew Wilkinson disingenuously suggested it was wrong to blame ICBC’s problems on his party, although it had been in power for the past 16 years. Instead of noting the Liberal hand had been deep in the corporation’s pocket for years and the Liberals had held down premium increases for political reasons, he cited more expensive technology and vehicles, and the changing nature of claims for the money problems.
While those cost pressures are real, British Columbians don’t share Wilkinson’s myopia. We can’t ignore the money that the Liberals demanded from ICBC — and B.C. Hydro — every year.
It was only in November that the Liberals promised to try to kick their dividend addiction, saying they had ruled out skimming from the corporation for the next three years, in an effort to ease the financial pressures.
Unfortunately, what they skimmed over the past seven years has helped dig the financial hole deeper. It will take some innovative thinking and some painful choices to set things right.