There’s some bad news for drivers in British Columbia: The Insurance Corporation of B.C. is considering raising premiums by up to 30 per cent within the next two years.
A report by accounting firm Ernst & Young, released by the minister responsible for ICBC David Eby on Monday, found that recent government intervention has eroded ICBC’s financial situation to a point where it is not sustainable.
The report pins the problems on “the rising number and size of claims, larger cash settlements for minor injuries, and more claims costs going towards legal representation than to claimants, all of which has led to the unsustainability of the current model,” reads part of the report.
A breakdown of costs and expenses incurred in 2016 show minor injuries accounted for 20 per cent of the total annual cost, while serious or catastrophic injuries account for less than 17 per cent.
However, the report says that in most jurisdictions minor injury costs are usually about half of the more serious injuries.
LISTEN: Simi Sara talks ICBC rates with Richard McCandless
Legal costs account for 24 per cent of annual costs, which is greater than both minor and non-minor injury claims.
If no action is taken, the report says the average B.C. driver will pay almost $2,000 per year for insurance by 2019 to prevent further financial losses. That’s an increase of almost 30 per cent.
The report recommends several measures the Crown corporation could take to shoring up its finances, including bringing back photo radar, capping payments for pain and suffering, and making high-risk drivers pay more.
But when it comes to the photo radar, Eby said that won’t be happening.
“There are all kinds of technologies out there that are available for improving road safety, we’ll be looking at all of in consultation with British Columbians.”
He mentioned red-light cameras as a “successful” example of road safety improvement.
Eby said they believe in the “fairness principle” for determining rates.
“If you are a good driver, if you are respecting British Columbia’s rules, if you’re not getting in accidents; your rates should be lower,” said Eby.
‘They’ve been living on borrowed time’
Richard McCandless, who served as an intervener in the BC Utilities Commission’s review of ICBC’s 2016 rate proposal, warns British Columbians should brace themselves for not just a small rate increase, but a big one.
“The government’s kept things around five per cent the last two or three years and they should’ve been much higher,” he said.
“And because of that the reserves at ICBC now are down.”
He said he hasn’t seen the numbers for the last fiscal year, but he imagines they are below the minimum required by government.
McCandless said the previous government was suppressing rate increases that should’ve taken place, leading to the Crown corporation’s current financial state.
– With files from The Canadian Press and Matt Lee
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