Inaction partly to blame for ICBC woes, study finds

A study from a Vancouverbased think-tank blames what it calls “misguided decisions” and runaway costs for the current financial crisis at ICBC.

The Fraser Institute study, written by John Chant, a professor emeritus of economics at Simon Fraser University, finds the Insurance Corp. of B.C.’s problems began years ago and grew steadily worse with government inaction.

The New Democrat government, in power for eight months, confirms the corporation faces a $1.3-billion loss this fiscal year and Chant says the public insurer had an $889-million loss last year. He says the corporation’s basic insurance operation, which has a monopoly over mandatory coverage, suffered persistent losses for years, but received infusions of $1.4 billion between 2010 and 2017 from the then profitable optional insurance side of the business.

The former Liberal government also transferred $1.2 billion to provincial coffers from optional insurance, but Chant says when that side of the corporation also began losing money, no action was taken to boost rates or stop the slide.

The corporation’s current financial position is unsustainable, he says, noting rate hikes totalling 44 per cent would have been required between 2015 and 2017 just to offset rising costs.

“Faced with exploding costs, the previous B.C. government had a choice: contain the costs, take the unpopular decision to increase rates substantially, or enact large-scale reform of the basic auto insurance system in the province. In the end, the government chose to do nothing,” Chant says in a news release.

No one from the Liberal Opposition was available to comment.

Chant says the current government deserves credit for acknowledging the problems, but the corporation’s role must be rethought and any fix will not be simple or inexpensive.

“The kind of Band-Aid solutions they’ve used in the past simply won’t be enough to fix its problems moving forward,” he says.