Once-praised public auto insurer is on a ‘path to insolvency’
B.C.’s once-celebrated public auto insurer has become a financial train wreck, its critics say, as studies into the beleaguered Crown corporation call for dramatic rate hikes and drastic structural changes to save it from ruin.
But while everyone appears to agree the system is broken, there is disagreement over how the Insurance Corp. of B.C. went off the rails in the first place and what must be done to fix it.
The crisis at ICBC is shaping up to be the first major financial hurdle for B.C.’s new NDP government.
Attorney General David Eby, who is also the minister responsible for ICBC, blames the previous Liberal government for problems at the corporation.
“ICBC, as described to me by senior bureaucrats, is on the path to insolvency,” Eby said. “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.’
Eby and other ICBC supporters single out the actions of former Liberal premier Gordon Campbell as marking the beginning of the corporation’s troubles.
Campbell required ICBC to keep much higher amounts of backup capital. The resulting stockpile proved irresistible to politicians in 2010 following the global financial meltdown, critics say, when the government began siphoning hundreds of millions of dollars of “excess capital” almost every year.
In all, the Liberals withdrew $1.2 billion from the lucrative optional side of ICBC’s business, and also transferred $1.4 billion to offset deficits on the compulsory side providing basic coverage beginning in 2012.
“The reason we’re in a bind right now is that there’s no more money left in the optional piggy bank,” said retired civil servant Rick McCandless, who has written on ICBC.
Liberal MLA John Yap said the New Democrats are playing politics in trying to lay blame for the problems at ICBC, which he largely attributed to the increasing number of collisions and claims year-overyear along with rising repair costs.
The Liberals’ priority was to keep rates low and stable. “Government did take action,” Yap said.
He said the Liberals understood there were challenges and had ICBC commission a third-party report on the situation to make recommendations, which the new government will be responsible to act on.
A recent report from Ernst & Young painted a dire picture at the Crown corporation, concluding that rates must increase by 30 per cent by 2019 to cover costs.
A separate forecast released last November by ICBC indicated rates would need to increase by 42 per cent over the next five years to make up for expenses.
The NDP government has not released a comprehensive plan for addressing the crisis at ICBC.