Q&A with ICBC's CEO: Insurance rate changes coming this fall
Published Wednesday, April 3, 2019 7:28AM PDT
This year, ICBC is making changes its president and CEO calls the "biggest in decades."
The changes that came into effect April 1 include a $5,500 cap on pain and suffering for minor injuries as well as sending certain claims, including injury claims under $50,000, to a Civil Resolution Tribunal rather than court.
The changes also include a doubling of certain benefits for crash victims, and limitations on the use of independent experts in court.
And in September, the Crown corporation will change the way it calculates basic insurance rates for all drivers in British Columbia, moving to what’s called a driver-based model.
The changes, according to Attorney General David Eby, and ICBC president and CEO Nicolas Jimenez, are aimed at fixing a system that Eby called a "dumpster fire" in early 2018, and that is widely understood to be broken.
Jimenez has been with ICBC for 15 years, and took on the role of president and CEO last July.
At a time when ICBC is over $1.1 billion in the hole, and driver premiums are once again jumping - this time 6.3 per cent across-the-board - CTV News Vancouver’s David Molko sat down with Jimenez as he works to turn the public insurance giant right side up.
Below are excerpts from that conversation. They have been edited for brevity and clarity.
"DUMPSTER FIRE" STILL RAGING?
David Molko, CTV News: You came on board a couple of months after the attorney general basically called this entire place a "dumpster fire." He threw it under the bus. He threw the former government under the bus. So, my first question to you is: is that dumpster fire still burning?
Nicolas Jimenez, ICBC president and CEO: The dumpster fire is being put out. I don’t like the term. I don’t like to use the term. But I will say, I think it catalyzed a lot of action. So I think what the attorney (general) recognized, and I think what government recognized, was the system was broken, and the system had been broken for a while, and the system needed to change.
Molko: Is it still broken?
Jimenez: We have essentially designed the solutions. Now we have to implement the solutions.
And we have the benefit of going last because we've been able to learn from other jurisdictions that have tried this. And so any mistakes made, and there have been mistakes made, no doubt, we've been able to build that into our design.
Molko: When the attorney general said that - "dumpster fire" - it sort of tore apart public confidence. It basically undermined what you do. How do you go about rebuilding and restoring confidence in the public?
Jimenez: We've got to deliver. What people want is a product that works for them when they need it. Insurance is this intangible thing. You can't see it. You always resent buying it whether it's for your business, or your home, or your vehicle. Nobody enjoys the insurance purchase. But what you want is confidence that what I'm buying has value, and when I need it it's going to be there, and it's going to provide me the very things I was promised it would provide.
The other thing people really want is certainty. What they don't like is an ever-escalating increase in costs, especially one they can't really understand. And so again these changes are designed to take costs out of the system so we can reduce the pressure that's rising up the cost of claims, and provide people with more certainty about what rates will be this year next year, and year after.
Molko: What would you say to British Columbians who have lost faith - who think that dumpster fire is still burning - it's raging?
Jimenez: I say we're making historic changes, and those changes are designed to bring a better product to people who need it.
DO THIS YEAR'S CHANGES GO FAR ENOUGH?
Molko: The attorney general has said these are coming five years too late. Do you agree with that?
Jimenez: What I would say is, they're coming now. Our focus is looking forward to fix the problems that we know are in the system. No one is running away from the fact that there are problems in the system and there are problems in the system for a while.
Molko: And you've been here 15 years so you've seen a lot of action, inaction. Do you sometimes feel like you're at the whim of whatever way the political wind tends to be blowing and think - there's got to be a better way here?
Jimenez: Well, I mean, the challenge and opportunity in working in a Crown (corporation) is, you have to work with the system you're given.
Molko: Do you think there should be a "no fault" option - meaning you can choose an insurance option where people can't sue in court? Is that the logical next step? Should we be there right now?
Jimenez: Again, that is something that government is going to have to wrestle with. The system we've got right now is largely designed on what other provinces like ours have done and succeeded in doing when they were first implemented.
Molko: If it were up to you, would you sell a "no fault" option?
Jimenez: I will sell whatever product is given to me by virtue of the government of the day.
Molko: Because it's not up to you?
Jimenez: It's not up to me. I'm happy to sell what we're selling today. And my job is to make sure we sell it efficiently, we settle claims fairly and quickly, and that we can keep prices affordable. That's my job.
BIG RATE CHANGES COMING IN SEPTEMBER
Molko: Let's talk about September. The basic principle as I read it is good drivers pay less, bad drivers pay more.
Molko: The estimate that came from last year is two-thirds of us are going to be paying less, one-third are going to be paying more. Is that accurate and what are the extremes going to look like? I've seen some of your estimates are plus or minus $200 a month. But are people going to see $500 increases? $500 decreases? Is it more subtle than that? Give me a sense of what coming.
Jimenez: We estimate that two-thirds of people are going to be better off with this rate design than they otherwise would have been, and that's good news. Within that, I'll tell you, 25 per cent of people are going to pay less than they pay today. About 40 per cent are going to pay less than the 6.3 per cent that we have put into the commission for rate for next year, and about a third are going to pay more. And that is very consistent with what British Columbians have said time and time again: Hey, I am tired of paying for people who get into crashes. My premium shouldn't pay for their bad behaviour.
Molko: And it is about fairness. But what do you say to the one-third that are going to be getting a bigger bill this year?
Jimenez: Well I'm saying you have been getting effectively subsidized by lower risk drivers. So you have a choice to make. You can accept that your behaviour leads to certain kinds of outcomes when it comes to premiums. Or you can say you know what I'm not particularly excited about paying more for insurance, and I would say “Great!” So what can you do to improve the way you drive? Maybe you put away your phone. Maybe you think about slowing down. There's lots of things that people can do to adjust their behaviour.