By: Luke Jones, Published on March 2, 2018 05:23 AM, Last Update on March 2, 2018 02:24 AM
The government of British Columbia has taken further steps to protect the financially troubled Insurance Corporation of British Columbia (ICBC). After introducing measures to save more costs, the government is now relaxing regulations that mandated the Crown monopoly auto insurer to meet minimum financial criteria.
David Eby, the Attorney General of B.C. and the minister in charge of the ICBC announced Wednesday the cabinet has allowed a suspension of the financial rules. In doing so, the ICBC can go to the province’s utilities commission to begin its path to financial stability.
The insurance provider is expected to lose $1.3 billion through this year, following a similar loss last year. Under the previous rules, the ICBC was obligated to hold enough money to cover 100 per cent of open claims. However, it currently has 54 per cent of the money needed, prompting the change of rules:
“So, we had to change the rule in order to appear in front of the utilities commission to lay out the changes we’re doing with ICBC to get back on track financially,” Eby said. “It has been due to escalating claims and the failure of the previous government to put the changes in place to get legal costs and auto body costs under control.”
The British Columbia government announced a cap on its minor injury awards to help alleviate the pressure on the ICBC. Under the new system, awards for pain and suffering for minor injuries in auto bodily injury lawsuits are capped to $5,500. The legislation will be introduced from April 1, 2019.
David Eby, B.C.’s Attorney General and the minister in charge of the ICBC said he decided to make a cap because of a severe increase in pain and suffering claim awards over the past six years. A summer, 2016 report from E&Y showed the average claim for 2016 was over $30,000.
The summer 2017 report showed ICBC was in financial danger and would need to raise auto insurance rates by 30% just to break even. Since the report, there has been a lot of blaming, but little action. The B.C. government blamed the previous Liberal government for taking billions of dollars from the insurer when there was a surplus.
Attorney General, David Eby, has said premiums will not increase by 30%, but until this week offered no course to rehabilitate the ICBC. The recent confirmation the company lost $935 million over nine months of its fiscal year, which will increase to $1.3 billion next quarter has pressed the urgency of the situation.