As a commercial entity, ICBC is in desperate trouble. The corporation is forecasting a loss of $1.3 billion in the current fiscal year. Yet in 2016, the company predicted red ink in the region of a mere $11 million. So what happened?
Political finagling no doubt played a part. Heading into last year’s election, the governing Liberals no doubt wished to show the cleanest possible balance sheet.
But that doesn’t explain the dramatic decline in the company’s fortunes. Management has pointed to a recent uptick in vehicle accident rates. Yet between 2000 and 2015, the number of deaths resulting from car crashes declined 30 per cent. Injuries also followed a downward curve.
How can these figures be reconciled with the fact that since 2000, the cost of minor-injury claims has risen 365 per cent? Or that ICBC is spending a quarter of its budget on accident litigation?
And here another incongruity arises. If you are an innocent victim of a car crash and sue the offending driver, ICBC defends the guilty driver in court. Your own insurance company takes the other guy’s side.
This is done, of course, to keep ICBC’s costs down, since the company must pay whatever damages the judge awards.
Yet while anomalies such as these are inherent in B.C.’s litigation-based system, the minister responsible, Attorney General David Eby, says he isn’t interested in the alternative — no-fault insurance.
That’s understandable. Glen Clark’s NDP administration looked at this option, but opinion polls showed significant opposition and the idea was abandoned.
Yet under ICBC’s worst-case scenario, rates might have to rise 42 per cent by 2020 unless significant changes are made. Premiums have already jumped eight per cent in the past few months.
Eby rejects no-fault, but if this option is off the table, what other choices does he have? The minister has said he’ll announce “major reforms” in the weeks ahead, but we already have a sense of where he might be headed.
Eby has suggested capping payouts for soft-tissue claims such as whiplash, and there has been talk of eliminating pain-and-suffering awards. Accident victims would be compensated only for financial losses, such as time off work, medical expenses and the like.
Eby refers to this as a “comprehensive care model,” but it sounds like no-fault.
Saskatchewan introduced that system in 1995, interestingly under an NDP administration. For victims who are not to blame, the no-fault plan covers the cost of rehabilitation, medical, personal and travel expenses, living assistance, and a permanent disability payment.
Drivers who cause an accident are eligible for medical costs, but are charged progressively more money to pay for the system. Customers can still choose to purchase a litigation-based package, but 99 per cent buy the no-fault version.
What killed no-fault during the Glen Clark era was the implication, implicit in the name, that “no-fault” means the driver responsible gets off scot-free. That proved decisive in turning public opinion against the scheme.
That needn’t be the case, as Saskatchewan’s program shows. But it might be that Eby hopes, by adopting a different name — “comprehensive care” — that he can avoid a voter backlash.
And he has this in his favour. Drivers might not like the new approach, because who wants to give up awards for soft-tissue injury, or pain and suffering, when the torments involved are real? On the other hand, are we ready for a 42 per cent rate hike?
We’ll have to see what Eby decides. But realistically, the only options capable of digging ICBC out of such a deep hole appear to be major premium increases, or some form of no-fault, camouflaged perhaps with a less inflammatory title.
