PALMER’S TAKE,
As huge losses persist, province won’t rule out switch to no-fault insurance
After missing the first major target for reducing financial losses at ICBC, Attorney General David Eby is again trying to limit the legal options of accident victims.
Eby announced Monday that the cabinet has changed court rules to limit the number of experts that can be called in proceedings involving the government-owned auto insurance company.
The expert witness cap follows last year’s moves to limit payouts for minor injuries and to divert smaller claims from the courts to civil tribunals.
But Eby, whose ministerial bailiwick includes responsibility for ICBC, rejected suggestions that he was encroaching on the rights of accident victims to balance the books.
“The benefits of the adversarial system are what we’re trying to preserve,” the former executive director of the civil liberties association told reporters. “What we’re trying to address is the excesses of the system that don’t advance any interests.”
Eby says the latest move should save “in excess of $400 million” — providing the courts fall in line with the government objective.
“Our hope is that the bench and the bar support the intent of these rules, understand why we’re doing this, and that we do realize these savings,” said the attorney general.
The move to rein in the use of expert witnesses follows last week’s discouraging financial news out of ICBC.
This time last year, Eby projected that his initial moves to rein in costs, improve road safety and increase rates would mean a dramatic improvement in the financial outlook at the troubled company.
The B.C. Liberals left behind the financial equivalent of “a dumpster fire” at ICBC, as Eby famously characterized it. In the 2017-18 transition year when the New Democrats took over from the Liberals, the company lost $1.296 billion.
In the service plan tabled with the budget for the first full year under the New Democrats, ICBC losses were scheduled to be almost halved, to $684 million.
Instead, ICBC had to admit last week that its losses are projected to be $1.18 billion, an improvement of less than 10 per cent on the big ticket loss inherited from the Liberals.
The larger-than-expected loss also encroached on other aspects of ICBC finances. As Rob Shaw reported in The Vancouver Sun last week, the company’s minimum capital test — the benchmark measure of an insurance company’s cash on hand to pay out all of its claims in an emergency — has slumped into negative territory, raising questions about longterm solvency.
Pressed to account for the disappointment, Eby blamed soaring claims costs and litigants rushing to court before the new caps take effect April 1.
“The key for me is we’ve got to make it to April 1,” he told Shaw. “We’re headed in the right direction.”
“The fire trucks are finally on scene,” he continued, not letting go of his favourite metaphor. “We’ve just got to get the water through the hoses.”
But the only apparent hosing at this point was to the NDP three-year plan to get ICBC back into the black.
After the no-longer-operative-target of $684 million in losses for the financial year ending March 31, ICBC is supposed to come within $21 million of balancing the books in the year ahead, before returning to profitability — $80 million into the black — in the 2020-21 financial year.
By coincidence that would be just before the next provincial election.
Eby has already ruled out going back to ratepayers to cover the bigger-thanexpected loss: “I don’t think it’s fair to go back to British Columbians when the issues are structural and the issues are the system we’re working in, and we can fix the system.”
Which is not as merciful to ICBC customers as it sounds, since he is already scheduled to preside over not one but two rate changes in the coming financial year.
A general increase of 6.3 per cent kicks in April 1, then on Sept. 1 there will be a further restructuring of rates in keeping with an ambitious plan approved last year. Impact of the latter will vary from customer to customer, but it is expected to entail significant increases for many.
Presuming the rate changes pay off on the revenue side and Eby’s caps and limits produce the hoped-for savings of $1.2 billion in the year ahead, then the books-balancing exercise could be back on track.
But that is a big if. ICBC fell half a billion dollars short of target in the first year and the trial lawyers have already announced that they will fight the caps in court in the year ahead.
Eby didn’t deny the plan was at risk, only saying to wait for next week’s provincial budget, due Tuesday.
“We’ll be releasing ICBC’s service plan, which will lay out the three-year projection for ICBC’s anticipated financial trajectory,” he said. Chances are the trajectory for returning to profitability will have to be extended.
“It’s our belief and our hope that those changes are going to result in putting firm financial ground under ICBC again, bringing the corporation back into the black and getting it back on track to affordable insurance for British Columbians,” maintained Eby.
But what if the latest changes don’t work? Would the New Democrats go to full-blown no-fault auto insurance?
“We’ll be monitoring it, we’ll be watching it, and we’ll be prepared to make the changes that are necessary,” said Eby, not ruling out the possibility.
ICBC fell half a billion dollars short of target ... and the trial lawyers have already announced that they will fight the caps in court in the year ahead.