Solutions to fix the broken Insurance Corporation of British Columbia (ICBC) continue to come thick and fast. While bankruptcy remains a possibility, authorities, government, and experts are scrambling for a solution, and one former government official believes he has the answer.
Richard McCandless, a former senior executive with ICBC, believes the problem is spending more than it earns. It is not a far-fetched assumption considering the July report into the ICBC said the company is in financial ruin because its premiums do not match how much it pays out on increasing claims for rising auto accidents in British Columbia.
“Well, it’s on a downward slope financially, and the slope is getting steeper each year,” McCandless said.
McCandless adds that the former Liberal government in BC kept rates artificially low, even though the province is the second most expensive auto insurance market in Canada. This is not the first time the Liberals have taken the blame, with Attorney General and ICBC overseer David Eby saying the former government took money out of the crown corporation when there was a surplus.
“You can stand by the ocean and order the tide not to come in… but it’s coming in,” he said.
“The problem with ICBC is that their revenues, mainly from premiums, aren’t keeping up with their cost increases. You’ve either got to increase the revenue — we’re back to rates again — or reduce the expenditures,” he told CKNW.
The E&Y report suggested ICBC would have to raise premiums by 30% to cover costs, something Eby says won’t happen, and McCandless says is not enough. Instead, he says the province should look to other jurisdictions for inspiration, particularly the two other major public insurance markets, Saskatchewan and Manitoba.
“Other provinces have also capped the pain and suffering for minor damages,” he said, referring to Ontario’s $30,000 deductible and Alberta’s $5,000 cap on minor claims like whiplash.