ICBC forecasted to lose a whopping $890M this fiscal year
The “financial dumpster fire” at British Columbia’s public insurer continues to burn out of control, according to the B.C. attorney general.
"This financial situation reflects the mounting pressure ICBC is under from the rising number and cost of claims,” David Eby said in a statement Friday.
The Insurance Corporation of British Columbia said it currently has posted a loss of $582 million in the first two quarters and is projected to lose $890 million at the end of the fiscal year.
Last fiscal year, ICBC had a posted net loss of $1.3 billion.
Eby said there were a few reasons why this is happening: bodily injury costs have soared and claims are taking longer to resolve, resulting in higher costs. He added that plaintiff lawyers are strategically building the value of the claim and demanding more money for settlements.
"These trends are becoming more severe. Since March 2017, the dollar value of settlements demanded by plaintiff lawyers for litigated files increased by 27 per cent,” Eby said.
The average cost of closed litigated injury claims has gone up to $121,686 this fiscal year from $100,427 in 2017.
In a press release, ICBC said the increasing claims cost pressures it is experiencing are not showing signs of slowing down unless there is a major reform of the auto insurance product.
It added the current system requires “substantial modernization,” and it is working with the province to finally do that.
“These changes will shift the focus away from maximizing payouts to a care-based system – which makes taking care of people injured in a crash the top priority, with more money for the treatments and support they need to get better and less spent on legal costs,” it said.
In February, the province unveiled the most drastic overhaul of the Crown corporation in decades, including a controversial cap on minor injury claims.
Eby projects the changes will bring in savings of about $1 billion but he said the province won’t see the improvements until the reforms take effect next April.
“It is now clear that this government needs to look for even more ways -- beyond what is already planned -- to further reduce the escalating cost of claims,” he said.
ICBC said it will also address the growing claims costs pressures with the next basic rate application, which is due to the British Columbia Utilities Commission by Dec. 15.