Opinion: Don’t kill ICBC, the goose that lays golden eggs

Attorney General David Eby's short-term fix to ICBC's problems — a cap on soft-tissue injury claims — does not address the larger problem, that the BC government has been raiding ICBC's coffers for years, and has not been fully transparent about the implications.

Opinion: Don’t kill ICBC, the goose that lays golden eggs

Published on February 23, 2018 by Richard Littlemore

Just to be contrary, I’d like to suggest that the Insurance Corp. of B.C. — characterized so recently by Attorney General David Eby as a financial dumpster fire — is actually a valuable public asset, and one that British Columbians would embrace if they realized the extent of its contribution. The problem, which Eby only partly diagnosed, is that ICBC’s political masters have abused the corporation so badly that it’s in danger of losing all public support.

To review the recent, hysterical narrative, ICBC is the monolithic public auto insurer with which we all must deal. And it appears to be badly run; at least, that might seem a fair conclusion when a once-profitable monopoly threatens a deficit of $1.3 billion.

Clearly, the shortfall is a problem, and I’ll leave it to the lawyers and actuaries to debate whether Eby’s short-term fix — a cap on soft-tissue injury claims — is a sufficient short-term solution. But the larger problem (if you’ll forgive a farmyard full of metaphor) is that the B.C. government has been treating ICBC as both a cash cow and a workhorse, and being less than fully transparent about the implications.

On the cash cow front, provincial politicians have been milking ICBC for years, sucking a net $2.1 billion into general revenue in the last decade alone. Christy Clark and Gordon Campbell’s Liberals loved this tactic; they helped balance the provincial budget by demanding dividends from Crown corporations.

(Even worse, the Liberals accumulated off-the-books debt in the same way — drawing more than $5 billion in dividends from B.C. Hydro even as that organization hemorrhaged money in ill-considered capital projects. Because the resulting shortfall appeared only on B.C. Hydro accounts, Clark’s Liberals were able to claim that they were balancing the provincial books and protecting B.C.’s credit rating, even while piling up profligate debt levels at Hydro.)

On the workhorse front, the provincial government uses ICBC to run all provincial licensing services, thus covering an expense that would fall on provincial taxpayers if B.C. had a private insurance regime. It’s difficult to tease those expenses out of the ICBC budget, but it’s easy to see how much ICBC collects in licensing fees and fines: last year, it took in $572 million — which also went directly into provincial coffers.

So, ICBC customers pay all auto-related administrative costs, while government spends the revenue, not on auto insurance claims or even, necessarily, on transportation-related investments. In fact, ICBC pays for some of those, too. Last year alone, the corporation spent $41 million in “road improvements and traffic safety programs” and more than $50 million in “road safety and loss management services.”

None of this is bad, necessarily. It makes sense for an insurance monopoly to spend small sums fixing dangerous street corners when those improvements will reduce accidents and cut insurance claims by a larger amount. It makes sense for an insurance monopoly to manage licensing and fines, creating a single, helpful service point for administration and enforcement (if you don’t pay your fines, you don’t get your insurance). Such efficiency would never be available in a private insurance environment.

But it doesn’t make sense for taxpayers to reap billions of dollars in good times and then condemn ICBC when claims go up. Imagine how much better the corporation would look if that $2.1 billion was sitting in retained earnings, ready for this rainy day?

Longtime ICBC watchers will recall the short, impressive tenure of the late Nick Geer, a senior executive to Jimmy Pattison who the Campbell Liberals recruited in 2001, ostensibly to privatize auto insurance. No ideologue, Geer studied the business and concluded that privatization would be a mistake: the system works.

But government interference has since endangered ICBC’s solvency and a lack of transparency has undermined public support. The current government has a chance to fix that – and the fate of a worthy enterprise hangs in the balance.

Read the full story in The Vancouver Sun: http://vancouversun.com/opinion/op-ed/opinion-dont-kill-icbc-the-goose-that-lays-golden-eggs

“They are making the victim the problem by capping this,” said Louise Craig, spokesperson for ROAD BC.

“They are making the victim the problem by capping this,” said Louise Craig, physiotherapist and spokesperson for ROAD BC.

“The problem is not that person who is injured, the problem is the person who caused the car accident. I was surprised the focus was on taking the rights away on the person injured, without a lot of information on how they will address distracted driving, crashes and the causes.”

B.C. government to cap ICBC minor pain and suffering claims at $5,500

Published on: February 7, 2018 by Rob Shaw

VICTORIA — The B.C. government will cap pain and suffering claims for minor injuries in automobile accidents at $5,500, a contentious change to the province’s monopoly auto insurance structure that some lawyers, health care advocates and rehabilitation businesses say could penalize victims who need help after a crash.

Attorney General David Eby said Tuesday the reforms are designed to salvage the worsening financial crisis at the Insurance Corp. of B.C. by placing a limit on what a person in a minor auto accident can receive in compensation for pain and suffering, while at the same time raising the medical benefits they separately receive to improve overall care.

But the decision brought criticism from the Trial Lawyers Association of B.C. and a coalition of 50 health care providers that includes physiotherapists and pain management clinics called ROAD B.C.

“They are making the victim the problem by capping this,” said Louise Craig, a Vancouver physiotherapist and spokesperson for group Rights Over Arbitrary Decisions (ROAD) for British Columbians.

“It doesn’t make sense. The problem is not that person who is injured, the problem is the person who caused the car accident. I was surprised the focus was on taking the rights away on the person injured, without a lot of information on how they will address distracted driving, crashes and the causes.”

Craig said the government should first be moving to address the rising number of crashes and injury claims through road safety initiatives and crackdowns on high-risk behaviour like distracted driving. Eby said those broader changes are coming, with a consultation starting this spring to create a new structure of insurance premiums for those with bad driving histories, as well as a move to activate existing red-light intersection cameras to detect speeders.

“It will take years to get ICBC back under control,” said Eby. “Where we’re headed is to (make) rates affordable for British Columbians. Where we’re headed is to make sure the corporation is finally sustainable. That is the aim of reforms today.”

The $5,500 cap on pain and suffering for minor injuries will be indexed to inflation. But ICBC said a person can still sue an at-fault driver for additional compensation or financial losses, for example to get extra money for lost wages.

British Columbia is the last province in Canada with a purely litigation-based insurance model, where drivers not at fault in a crash sue the at-fault driver for economic loss and suffering.

The $5,500 minor injury cap is slightly higher than Alberta’s $5,020 threshold, but lower than New Brunswick, Nova Scotia, P.E.I. and Newfoundland. Quebec and Manitoba have full no-fault insurance, which prevents lawsuits. Saskatchewan has a dual system, with a $5,000 cap on the tort option.

The changes come into effect April 1, 2019, and are expected to save ICBC $1 billion a year. Accidents and claims that occur before then will remain under the current system, without a cap.

Trial Lawyers Association of B.C. CEO Shawn Mitchell said: “Today’s ill-advised policy announcement by government throws the rights of British Columbians on the ICBC dumpster fire.”

Canadian Bar Association B.C. branch president Bill Veenstra added, “The answer to ICBC’s current financial woes is not to place the burden on the shoulders of innocent victims.”

Minor injuries include mild whiplash, aches and sprains, cuts and bruises and anxiety. But if those injuries persist beyond 12 months and have a significant impact on work or school, they are no longer considered minor or under the cap. Broken bones or concussions are automatically considered major injuries.

Doctors will be allowed to determine if injuries are considered minor, not ICBC. However, if there is a dispute, ICBC will use a new independent dispute resolution process that mirrors a new civil resolution tribunal used to settle strata disputes.

This will reduce “out of control legal costs,” said Eby, that have risen 265 per cent since 2000.

The independent dispute resolution process is modeled after a Civil Dispute Resolution tribunal currently in place in B.C., that mainly handles small-scale issues like strata disputes.

“I have very little confidence that a tribunal that administers condo decisions about whether people have to pay condo fees are going to be equipped to make decisions that a Supreme Court judge struggles with,” said Craig. “It’s going to make it more of a mess than it already is.”

The Crown auto insurer is on track to lose $1.3 billion in the fiscal year ending March 31, as it faces a spike in claims, settlements and legal costs. Eby sidestepped repeated questions about whether ICBC would continue to hemorrhage money before the new cap comes into place in 2019, and whether additional auto insurance rate hikes are looming for motorists.

Under the current system, an average minor injury claim costs $30,038, of which $16,500 is paid for pain and suffering, $7,500 for wage loss and medical care and $6,038 for legal costs and expert reports.

To compensate for the cap, ICBC will increase the benefits that people injured in a crash can access for lost wages, health care and rehabilitation. Those benefits have not been increased since 1991, and the boost would also apply to those at-fault in a crash.

Read the full story in The Vancouver Sun: http://vancouversun.com/news/politics/b-c-government-to-cap-icbc-minor-injury-claims-at-5500

Government of B.C. recklessly chose to limit the rights of British Columbians

Today the government of B.C. recklessly chose to limit the rights of British Columbians based on ICBC’s so-called “financial dumpster fire”, despite repeated calls for B.C.’s Auditor General to conduct an independent audit of ICBC’s finances. Nearly 12,000 of you have signed a petition opposing this very policy, yet the government chose to disregard our voices and instead trust ICBC. The worst part? Our rights will be restricted, yet our insurance rates will continue to rise.

Government directs changes to make ICBC work for B.C. drivers again

Victoria Tuesday, February 6, 2018

The British Columbia government is directing changes for the Insurance Corporation of British Columbia (ICBC) to bring about an end to its financial crisis, while keeping rates affordable for B.C. drivers, Attorney General David Eby announced.

“ICBC was created to provide affordable insurance to all B.C. drivers, but years of reckless decisions by the previous government have thrown the corporation into financial chaos,” Eby said. “Today we start making the tough decisions that will stem ICBC’s losses, keep insurance affordable and provide enhanced care for people injured in automobile accidents. We’re going to make ICBC work for people again.”

Today’s changes come in the wake of multiple revelations about decisions and inaction by the previous government, leading to ICBC projecting a 2017-2018 net loss of $1.3 billion. B.C. drivers could face premium increases averaging $400 or more, if no action is taken.

“For too long, difficult decisions have been put off and growing financial problems at ICBC hidden from the public. The changes we’re initiating today will reduce ICBC’s claims costs by more than $1 billion every year, helping make it sustainable for decades to come,” Eby said.

Taking effect April 1, 2019, the changes include:

  • A new limit of $5,500 on pain and suffering for minor injury claims. The cost of those claims has increased 265% since 2000. British Columbia is the last province in Canada to take this kind of action.
  • The first major improvements in accident benefits in 25 years, dramatically increasing the care available for anyone injured in a crash, regardless of fault. The overall medical care and recovery cost allowance will be doubled to $300,000. This change will be made retroactive to Jan. 1, 2018, so it will effectively be in place to protect injured drivers and passengers immediately. See more on this benefit below.
  • An independent dispute resolution process for certain motor vehicle injury claims.

Together, these changes will reduce the amount ICBC spends on legal fees and expenses, which have grown to consume 24% of ICBC’s budget. The savings from this change, when coupled with other planned initiatives, will restore ICBC to financial sustainability and finance the planned accident benefit improvements.

Disputes over certain motor vehicle injury claims, including the classification of an injury, will be adjudicated by B.C.’s Civil Resolution Tribunal, an independent body that already adjudicates strata and small claims disputes in the province.

“We’re putting ICBC’s priority back where it should be — providing fair, affordable rates for British Columbians, and giving drivers peace of mind with appropriate care if they are in a collision,” Eby said.

Eby also announced that ICBC will be consulting with customers on major revisions to the corporation’s rate structure with the goal of ensuring good drivers pay less, and bad drivers pay more. The consultation will ensure rate structure changes are responsive to the interests of British Columbians and done with full transparency.

“British Columbians can no longer afford to keep paying more and more for their auto insurance every year, and this is the decisive and immediate action which is needed to relieve the pressure on ICBC’s rates,” said Joy MacPhail, chair, ICBC board of directors. “These changes make the injured customer our top priority, by redirecting payments away from legal costs into significantly enhancing the care and treatments for anyone who is injured in a crash.”

“Unbelievably, accident benefits haven’t been increased since 1991,” said Giovanna Boniface, national director of professional affairs for the Canadian Association of Occupational Therapists. “B.C. occupational therapists have been helping injured drivers return to activities of daily living for decades and have seen declines in access to vital and necessary treatments for years. By raising the amount covered, and expanding the variety of treatments that are eligible, these changes will allow more people to have access to the treatment and adaptive equipment they need, thereby fostering quicker recovery and return to meaningful daily activities.”

“Disability Alliance BC has been advocating for improvements to accident benefits for 12 years,” said Jane Dyson, the DABC’s executive director. “The doubling of the overall allowance for medical care and recovery is a significant improvement. We welcome these long-overdue changes that will mean that people who are catastrophically injured in motor vehicle accidents have better supports available to help them rebuild their lives. Moving forward, DABC looks forward to continued dialogue with ICBC and government to help ensure that British Columbians accessing accident benefits receive the treatment and financial support they need.”

Accident benefit details:

  • Doubling the lifetime allowance for medical care and recovery costs for those catastrophically injured in a car accident from $150,000 to $300,000. Legislation will be introduced with the intention of making this benefit retroactive to Jan. 1, 2018, in order to start immediately helping seriously injured British Columbians.
  • Covering a greater variety of treatment services.
  • Significantly increasing the amount covered for treatments, so customers don’t have to pay out-of-pocket.
  • More than doubling wage loss payments to $740 per week, almost doubling home support benefits to $280 per week, tripling funeral cost coverage to $7,500, and increasing death benefits to $30,000.

Quick Facts:

  • Injury claims totalled $2.7 billion in 2016, an increase of 80% in the last seven years.
  • The average claim paid out for minor injuries has risen from $8,200 in the year 2000 to $30,038 in 2016, an increase of 265%.
  • At the same time, the average pain and suffering awards paid out for minor injuries have risen from $5,004 in 2000 to more than $16,499 in 2016.
  • Vehicle damage claims costs have increased 30% in just two years, to a total of $1.5 billion in 2016 alone.
  • Use of the CRT for minor injury dispute resolution means claimants who don’t use a lawyer will get to keep their entire settlement, rather than paying a portion of it to lawyer fees.
  • The use of the CRT for these disputes will also reduce ICBC’s legal costs, which account for 24% of the corporation’s total annual costs.
  • These costs are greater than the cost of running ICBC.

Learn More:

ICBC: icbc.com/change

B.C.’s Civil Resolution Tribunal: civilresolutionbc.ca

See the full press release here: https://news.gov.bc.ca/releases/2018AG0003-000164