Government considers cap on minor injury claims
Eby says growing losses mean ICBC must cut costs to contain rate hikes
VICTORIA The B.C. government is considering capping insurance claims on minor automobile accidents, as well as boosting eligible amounts for physiotherapy and other medical benefits, as it tries to stem rising financial losses at the Insurance Corp. of B.C.
Attorney General David Eby, who oversees ICBC, said a cap on the amount paid out by ICBC on minor injuries could be a key part of a suite of reforms he’s drafting to help prevent massive vehicle rate hikes from the monopoly Crown auto insurer.
“We’re looking at caps on minor pain and suffering awards, because there’s been an explosion in the size of awards people receive for minor whiplash and minor injuries,” Eby said in an interview Thursday.
ICBC also hopes to find efficiencies with trial lawyers in court cases over claims, said Eby. B.C. is the last province in Canada with a purely litigation-based insurance model, where drivers not at fault in a crash sue the at-fault driver for economic loss and suffering.
ICBC board chairwoman Joy MacPhail said a cap has worked in other provinces and states. Alberta, for example, has a minor injury claims cap of almost $5,000.
“We’ve also made it clear if one is involved in a catastrophic crash where there’s huge injuries suffered, that the tort system will still apply and one will be able to litigate those kinds of claims,” she said.
A recent outside report into ICBC said it could freeze rates for the next five years by putting a $4,000-$6,000 cap on pain and suffering for minor injuries, quadrupling medical accident benefits and paying out rehab costs as accident benefits rather than cash lump sums. That includes a boost to medical benefits even if you are at fault in the crash.
New financial documents released by ICBC, as well as the province’s quarterly financial update released this week, paint an even bleaker financial picture than previously known for the corporation.
Basic auto rates would now have to rise more than 50 per cent during the next five years to cover ICBC’s growing claims and legal costs, according to new financial figures it filed with the independent power regulator this week.
The corporation’s previous “worst-case scenario” was a 42 per cent rate hike over five years, revealed in late 2016.
The government’s quarterly financial update this week also revealed the amount ICBC is projected to lose in the current fiscal year has shot up to $364 million from an estimated $139 million in September. Eby said ICBC needs to find $600 million a year to cover losses, which would translate into an immediate 20 per cent rate hike.
“The current system of the way we insure people and the benefits we give that insurance are simply not sustainable,” said MacPhail. “And it’s getting worse.”
The previous Liberal government kept rates artificially low by repeatedly taking excess capital from ICBC’s optional insurance business and using it to subsidize basic rates. But with that pot of excess money almost exhausted, the corporation is projected to run massive losses.
The new NDP government has said it won’t allow steep rate hikes, and has instead embarked upon a review of how it could fundamentally change the public insurance system.
“We’re looking at the major cost drivers at ICBC, so that’s legal expenses, (which cost) 25 cents on every dollar, autobody repair is up 30 per cent in a couple of years, and operationally how ICBC works as a corporation,” said Eby.
Eby reiterated that B.C. will not adopt a “no-fault” insurance scheme, which restricts a person’s right to sue, nor will he allow for any hybrid models like Saskatchewan that partly incorporate nofault frameworks.
MacPhail said ICBC is also carefully examining rate fairness, with the goal to hike fees on high-risk drivers who have racked up tickets, crashes and penalties. That’s not currently taken into consideration when someone is quoted for basic auto insurance.
“Rate fairness would take that behaviour and use it to calculate the amount of insurance that they have to pay,” said MacPhail.
If one is involved in a catastrophic crash where there’s huge injuries suffered ... the tort system will still apply and one will be able to litigate.