Rising crash claims and injury payouts have depleted the Insurance Corporation of B.C.’s cash reserves below the province’s standard, forcing the province to exempt the Crown corporation from the rules to allow reforms.
Attorney General David Eby said he eased the cash reserve regulations to allow ICBC to apply to the B.C. Utilities Commission for a rate increase it is already collecting, and possibly additional increases.
“The rule in B.C. is that ICBC has to have 100 per cent match between the amount of money they have in the bank and the claims they are aware of,” Eby told reporters at the B.C. legislature Wednesday. “ICBC doesn’t have that. They have about 54 cents in the bank for every dollar of claim that they’re aware of. So we had to change the rule in order to appear in front of the utilities commission to lay out the changes that we’re doing with ICBC to get it back on track financially.”
The province announced earlier this month cost-cutting changes that include a $5,500 limit on payouts for pain and suffering claims, to take effect in April 2019.
In 2013, ICBC had $1.45 in the bank for every dollar of claims, but the situation has eroded due to an 80 per cent increase in injury claim costs in the past seven years.
Eby intends to present legislation this spring to limit minor injury payouts, and also double the maximum benefit for serious injury claims from $150,000 to $300,000. With cost-containing measures a year away, it is not yet clear how much insurance rates will have to rise as ICBC estimates a $1.3 billion shortfall for the current year.
A 6.4 per cent increase in basic insurance took effect on an interim basis in November, with an additional increase to optional insurance resulting in an eight per cent jump in cost for vehicle owners who get both types of coverage from ICBC.
A consultant’s report released last summer suggested that ICBC rates could go up 30 per cent by 2019 if changes are not made.