BC's public insurance company is broken. And it's going to cost consumers money to fix it.
The Insurance Corporation of British Columbia has been the main provider of auto insurance for British Columbians since 1973. But increasing costs and structural problems have put the insurer in dire financial straits.
"ICBC, as described to me by senior bureaucrats, is on the path to insolvency," Attorney General David Eby told The Canadian Press. "It's very unfortunate that it's been left for so long, because I think there was really an opportunity to address this much earlier."
The fix for this is likely to be a sharp increase in what are already amongst the highest rates in the country. A report from Ernst & Young concluded that a 30 percent increase was necessary by 2019. An ICBC report stated that $1.5 billion in extra capital is required between 2017 and 2020.
Eby and other supporters of ICBC put the main problems at the feet of former Liberal Premier Gordon Campbell. Campbell reqired ICBC to keep higher amounts of back-up cash. In 2010, politicians began drawing on that money, taking $1.2 billion from the optional coverage side of ICBC's business transfering another $1.4 billion to cover losses on the compulsory side of the business. That wiped out the ICBC's reserves.
Eby pulled no punches, saying last month that the current government's 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."
Solutions to the problem could include massive rate hikes, a change to no-fault insurance as used in some other provinces, or even capping of claims and a return to photo radar.
The current NDP government has not yet released a plan to solve ICBC's problems. But a plan is quickly becoming urgent, and the government has a deadline of August 31 to submit filings before this year's Utilities Commission rate hearing.