The Insurance Corporation of British Columbia (ICBC) has been in the spotlight recently after a 2017 report found the public insurer is in financial danger. Now, an economics leader has said the current situation the insurer finds itself in is “unsustainable” and that its problems are from causes it cannot affect.
When the report was published, it was suggested the B.C. standard auto insurance provider would have to increase premiums by 30% just to survive. During 2016-17, the ICBC lost a record $889 million, and projections for last year suggest the company will lose $1.3 billion when its financial year ends.
The loss will account for 23% of the company’s claims revenue. The situation has been blamed on rising claims costs and the frequency of collisions. The current NDP government in B.C. also laid the blame at the former liberal government for taking nearly $2 billion for ICBC when the company had a surplus.
Numerous policies have been set in motion to ease the burden on the company, such as capping minor injury claims, although the B.C. government has rejected calls to introduce private companies into the market to stimulate competition.
John Chant, professor emeritus of economics at Simon Fraser University, has suggested many of the factors that caused the ICBC problems are not things it can solve.
The corporation is “a victim of both an unfriendly environment and misguided provincial government policies,” Chant noted.
“Were ICBC to fail, it would be much more damaging because of its size (its annual premiums total over $5.0 billion) and because it is the only supplier of compulsory (basic) insurance in British Columbia,” he said.
“ICBC’s financial position is unsustainable. The current government deserves credit for bringing the issue forward and seeking informed advice. Band-aid solutions will not be enough to fix its problems,” Chant added.