By: Luke Jones, Published on April 17, 2018 04:32 PM, Last Update on April 17, 2018 02:45 PM
While politicians and industry experts are still weighing in on why the Insurance Corporation of British Columbia (ICBC) is financially struggling. A new report from the Fraser Institute thinks it has an answer, suggesting the fiscal problems of British Columbia’s public insurer can be blamed on a “misguided provincial government policies” and an unfriendly environment.
Provocatively titled The Decline and Fall of ICBC report was released on April 5 and points to the higher frequency of claims and collisions. “Higher costs resulting from more vehicles on provincial roads and greater congestion are largely beyond ICBC’s control,” the report’s executive summary noted.
“Some cost pressures, however, may be controllable,” wrote John Chant, senior fellow at the Fraser Institute and the report’s author. “Reduced enforcement may have increased the frequency of accidents, while ICBC’s procedures for assessing property damage claims may have raised the cost of those claims.”
It is already known the ICBC is facing a $1.3 billion loss through its fiscal year and lost $889 million last year. The Fraser report points to a 61% increase in claims between 2012 and 2017, while the average cost of claims jumped 40% over the same timeframe.
“In the absence of cost containment measures, double-digit rate increases for basic insurance were required to offset the shortfalls,” Chant said in a press release.
“Without this requirement, ICBC could have raises rates to reflect the increasing costs and, in doing so, preserved its finances. Customers would not have welcomed these rate increases, but they would have saved ICBC from having to make much larger increases in the future.”