A recent leaked report in British Columbia showed that the Insurance Corporation of British Columbia (ICBC) is close to financial ruin. The damning report shows that rising claims and collision frequencies have put the public auto insurance provider on the brink. It shows that to recover, premiums may have to increase by up to 30%.
The report was commissioned by the former Liberal government, which asked Ernst & Young to look into the state of the ICBC. The results were startling and suggest an overhaul of the insurance market in B.C. is needed.
While Attorney General (and man in charge of the ICBC) David Eby has said he will not oversee drastic premium rises, he has described the report as very worrying.
“This is a very serious and a very grave concern,” Eby said. “We will take the steps necessary to fix what is happening at ICBC, to make British Columbia’s roads safer for British Columbians and to ensure that rates are affordable for British Columbians, because clearly that is not where we are tracking right now.”
Car collisions have increased in British Columbia in recent years while repairing vehicles, covering medical costs, and dealing with claims have also surged. The combination has put the insurance company in a tough fiscal situation. Eby says he will not allow auto insurance premiums to soar, but has not detailed how he plans to save the ICBC.
One suggestion has been to re-introduce photo radar systems, but Eby has been dismissive of the call. Eby insists the former government tried too hard to shield customers from a rise in auto insurance premiums and has placed the ICBC in financial peril.
It is unclear whether Eby will pursue the reports suggestions, which include limiting payments for pain and sufferings, charging high-risk drivers more for coverage, and raising premiums for luxury vehicles.
“ICBC has been careening toward a crisis over at least the last couple of years. This should have been an election issue,” Eby stated. “Our goal is to make roads as safe as possible and to make sure that rates stay affordable for British Columbians, and that’s what we’ll be doing. It was not a priority of the previous government, obviously.”
Eby seems to be cold on most of these ideas. One thing is for certain, if nothing is done, the ICBC will ultimately crumble under the financial burden. Eby argues premium increases will not happen, but it increasingly looks inevitable.