Government bailout of ICBC is possible but not imminent as debt mounts
Posted February 28, 2018 4:05 pm.
Last Updated February 28, 2018 4:17 pm.
This article is more than 5 years old.
VICTORIA (NEWS 1130) – The ongoing financial bleeding at ICBC has prompted talk of a possible bailout by the provincial government and that’s because capital reserves are now lower than minimum requirements set by the BC Utility Commission.
Attorney General David Eby says it’s too early to talk about a bailout, but taxpayers should know they are facing the prospect of potentially funding one.
“In the long term, if we don’t fix ICBC that will be a very real issue. We simply won’t have the capital to cover the claims that are being made. It is not as urgent as that at this stage. The urgency is more around the technicality of we can’t get in front of the Utilities Commission, but if there was a large catastrophic event, an earthquake, mass flooding, as a result, [then] ICBC might be in a jam.”
Eby’s not ruling out another rate hike this year, but he adds efforts are being made to ensure good drivers don’t suffer. “There will certainly be future rate hikes for ICBC. The issue has always been, how do we avoid the 30-to-40 per cent rate hikes that have been proposed to close the gap.”
Eby feels bad drivers simply don’t pay enough in this province.
“That’s why, on Monday, we’re starting an engagement with British Columbians about, ‘OK, so we all agree with that principle. Who’s a bad driver? How many tickets do you have to get? How many accidents and how much should their insurance go up?’ Some drivers when we’re done this rate reform may actually see a rate decrease. Bad drivers out there may see dramatic rate increases.”
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The attorney general continues to lay blame at the feet of the former BC Liberal government for the so-called “dumpster fire” situation at ICBC, as he previously described it.
“Action should have been taken in 2014 when the government knew we were headed down this road. Taxpayers are already subsidizing ICBC. On this year’s loss, $1.3 billion, that’s money that’s not available to put into schools and hospitals and so on, because it directly — dollar for dollar — affects the provincial budget.”
Earlier this year, Eby announced a series of incoming changes to ICBC, including a cap on minor injury payouts and redefining what constitutes an injury.
A recent government-directed independent review of ICBC, conducted by PwC, identified at least $60 million worth of savings. It also found staff at ICBC do a fairly good job of tracking and preventing fraud.
ICBC is still expected to lose more than $1 billion this fiscal year.
It’s blaming the numbers on a surge in claims and the growth in the costs of those cases. “Our projected net loss for our full 12-month, fiscal year (ending Mar. 31, 2018) now stands at almost $1.3 billion,” the agency previously said in a statement.
It adds, the current trend is not sustainable as net claim costs for the first nine months of the current fiscal year have totalled $4.25 billion.
