By: Luke Jones, Published on February 10, 2018 05:41 PM, Last Update on March 1, 2018 02:42 PM
The Insurance Bureau of Canada (IBC) says recent changes to the Insurance Corporation of British Columbia will see the monopoly government auto insurance provider operate more like a private carrier.
IBC makes the suggestion after the British Columbia government announced a cap on its minor injury awards. 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.
A cap on minor injury claims “has been used in other provinces to control costs,” IBC vice president, Pacific Aaron Sutherland said.
“ICBC’s financial challenges have in many ways been a long time coming,” Sutherland said. “They have all come to a head very recently. It does call into question whether or not we should have a government run monopoly providing auto insurance in this province going forward.”