BC has the highest auto insurance rates in Canada second only to Ontario.
ICBC, once celebrated as a public insurer, is now a train wreck. To save it from complete ruin, rates need to skyrocket. The prediction is that by 2019 we will be paying 30 per cent more for insurance than we do today. The experts say only drastic structural changes will save it was imploding, but there seems to be a major disagreement on just what to do to pull ICBC back from the brink of insolvency.
This has become the first major financial hurdle the New Democrats have to deal with. As you may guess, with politics being politics, David Eby the Attorney General blames the previous Liberal regime for the mess. Eby says had the liberals not used the crown corporation as a piggy bank ICBC wouldn’t be in the position it’s in now.
It was Gord Campbell as premier who required ICBC to to keep a large amount of back-up capital on hand, but the growing stock pile proved to be too irresistible to politicians and in 2010 the liberals began siphoning off hundreds of millions of dollars of what they termed “excess capital” just about every year thereafter. Eby says there was a real opportunity to address the problems much earlier, but nothing was done.
ICBC was actually created by the then ruling NDP in the early 1970’s with the goal of affordable universal auto insurance. The government allowed private insurers to enter the market in 1976 for additional coverage, but basic insurance must be through ICBC. These days there is no money left in the optional piggy bank.
Rick McCandless, a retired civil servant, says in a foot note he found in a report on ICBC commissioned by the liberals, indicates the cumulative rate hike will be closer to 117 per cent over the next four years.
Some advocates see ICBC as a good program gone awry, while some free enterprises view it as fundamentally flawed and that it worked well , not because of the system, but despite it. The Canadian Federation of Canadian Taxpayers says consumers suffer because ICBC is a monopoly and according to Scott Henning who is with the federation, private or public, monopolies are bad for consumers.
Arron Sutherland who is with the Insurance Bureau of Canada says if the government and ICBC are serious about making repairs a real discussion is needed and to truly fix ICBC competition needs to be included in those talks
The government has until August 31st to submit its filings ahead of ICBC rate setting hearings at the utilities commission.