By: Luke Jones, Published on February 9, 2018 09:37 AM, Last Update on February 9, 2018 06:38 AM
Work to save the sinking Insurance Corporation of British Columbia (ICBC) has finally started, nearly six months after a report showed the public auto insurer is in financial peril. On Feb. 6, the B.C. government announced several changes that it hopes will save the corporation billions of dollars per year.
Among the changes to implement on April 01, 2019 is a new $5,500 limit on pain and suffering for minor injury claims, while medical care and recovery cost allowance will be doubled to $300,000.
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.
Of course, work into saving the ICBC has been happening for some time and was announced this week.
“Over the past number of months, the ICBC board and senior management have been working hard alongside government to put together long-term and meaningful solutions to the challenges facing our current auto insurance system and we firmly stand behind the changes being announced,” said Joy MacPhail, chair of ICBC’s board of directors, in a statement to Insurance Business.
While the moves have been praised, the Insurance Bureau of Canada (IBC) still believes introducing private basic auto coverage to the province is the answer.
“Opening ICBC to competition and allowing Canada’s private insurers to bring choice to the market would bring significant savings to BC drivers, and must be part of any long-term solution to the challenges in BC’s auto insurance system,” said Aaron Sutherland, IBC’s Pacific vice-president.