The Insurance Corporation of British Columbia continues to struggle, according to a recent report from the Fraser Institute. Professor Emeritus John Chant stated that the corporation’s problems began years ago, but they grew worse as the government failed to take action.
Today, ICBC’s future remains uncertain as it struggles with rising costs and crippling debt. Here are some facts to consider:
Staggering Losses
ICBC is facing a $1.3 billion loss this year, according to Chant’s research. The corporation sustained an $889 million loss last year and posted a loss of $935 million for the first nine months of 2017-2018.
The basic insurance operation, which currently monopolises mandatory coverage, has suffered losses for years. However, it received funding of $1.4 billion in 2010-2017 from the then-profitable optional insurance branch.
The former Liberal government provided ICBC with $1.2 billion for the agency’s optional insurance program, but when that program began to lose money, no further action was taken.
Rising Expenses
ICBC’s financial situation has been called “unsustainable” by multiple experts. Rate hikes of 44 percent would have been necessary between 2015 and 2017 to offset increasing costs.
The Crown Corporation blamed these rising costs on the number of accidents occurring across the province. The agency also stated that the number of claims received is increasing by thousands each year.
Currently, the cost of injury claims is nearly $3 billion per year, up from the $2 billion reported in 2014.
The agency also saw a spike of 80 per cent in large loss claims over the past year. On average, large loss claims cost $450,000 per claim.
Despite ICBC’s severe financial troubles, B.C. Attorney General David Eby has dismissed two solutions: privatizing ICBC or moving to a no-fault insurance system. Even with privatization, Eby stated that there is no guarantee that insurance premiums will be lower for British Columbian drivers. Plus, switching to a no-fault system would make it more challenging for drivers to receive damages in court.