ICBC posts net loss of $582 million for first six months of fiscal year

ICBC has posted a net loss of $582 million for the first six months of our current fiscal year (April 1 to September 30, 2018), reflective of the continued pressure ICBC is under from the rising number and cost of claims.

The number of claims being filed with ICBC and the cost of both injury and vehicle damage claims have been escalating in recent years, as has been widely reported. ICBC’s net claims incurred for the first six months of its fiscal year alone topped $3 billion, an increase of $634 million, or 26 per cent, over the same period last year ($2.4 billion).

During the first six months of this current fiscal year, in particular, ICBC’s claims settlement costs have continued to grow, with an increasing number of large loss claims which run into hundreds of thousands of dollars each, and continuing aggressive pressure from plaintiff counsel which is leading to slower claims closure rates and higher settlement demands.

This significant financial loss comes after ICBC reported a net loss of $1.3 billion for its 2017/18 fiscal year, and means ICBC is now projecting to report a year-end financial net loss of $890 million for 2018/19.

There are no signs that the ongoing and increasing claims cost pressures ICBC is experiencing will abate without the major reform to the auto insurance product in British Columbia which government and ICBC are implementing. While our current financial pressures are clearly serious, they have been caused by an auto insurance system which has long been in need of substantial modernization – something that is now, at last, happening.

These changes will shift the focus away from maximizing payouts to a care-based system – which makes taking care of people injured in a crash the top priority, with more money for the treatments and support they need to get better and less spent on legal costs.

Substantial improvements to ICBC’s accident benefits will improve the care available for anyone who is injured in a crash. ICBC will be able to fund these increased benefits though reduced legal costs, a limit on payouts for pain and suffering for minor injuries and a new dispute resolution model – all resulting in projected net savings of $1 billion annually.

Government and ICBC are also modernizing ICBC’s 30 year-old insurance system to ensure all drivers pay premiums which more accurately reflect the risk they represent on the road. In addition, a number of road safety initiatives are underway, aimed at lowering crashes and mitigating the current financial pressures on ICBC.

The growing claims costs pressures ICBC is facing will also need to be addressed with the next basic rate application which is due with the British Columbia Utilities Commission by December 15.

GM in for ‘one hell of a fight’ over planned Oshawa plant closure: Union

The union representing workers at the General Motors assembly plant in Oshawa, Ont., is promising “one hell of a fight” after the automaker announced it would close the location along with four other facilities in the U.S. as part of a global reorganization.

Hours after GM’s announcement, Jerry Dias, national president of Unifor, stood before a union hall overflowing with anxious GM workers and said the union will fight against the planned move “tooth and nail.”

“They are not closing our damn plant without one hell of a fight,” Dias told the audience, some still drenched from holding an impromptu picket line in the driving rain.

He said the plant has won “every award” and was the best by “every matrix.”

“We are sick and tired of being pushed around. And we’re not going to be pushed around… we deserve respect,” he said.

GM announced the closures Monday, November 26, 2018 as part of a sweeping strategy to transform its product line and manufacturing process that will see the company focus on electric and autonomous vehicle programs, a plan that it said will save the company US$6 billion by the year 2020.

“This industry is changing very rapidly, when you look at all of the transformative technologies, be it propulsion, autonomous driving… These are things we’re doing to strengthen the core business,” GM chief executive and chairwoman Mary Barra told reporters Monday. “We think it’s appropriate to do it at a time, and get in front of it, while the company is strong and while the economy is strong.”

GM also said it will reduce salaried and salaried contract staff by 15 per cent, which includes 25 per cent fewer executives. The US$6 billion in savings includes cost reductions of US$4.5 billion and lower capital expenditure annually of almost US$1.5 billion.

GM’s shares in New York jumped as high as 7.8 per cent to US$38.75, their highest level since July. The automaker’s shares closed at US$37.65, up 4.79 per cent.

The impending shutdown is “scary,” said Matt Smith, who has worked at the Oshawa plant for 12 years. He said his wife also works at the GM facility and the pair have an 11-month-old at home.

“I don’t know how I’m going to feed my family,” he said outside of the plant’s south gate, where workers instituted a blockade for trucks from the entrance.

“It’s hard, it’s horrible! We have always been the best plant in North America. It’s a kick in the nuts.”

Unifor, the union representing more than 2,500 workers at the plant, said it has been told that there is no product allocated to the Oshawa plant past December 2019.

Production began at the Oshawa plant on Nov. 7, 1953, and in the 1980s the plant employed roughly 23,000 people.

GM is also closing the Detroit-Hamtramck Assembly plant in Detroit and the Lordstown Assembly in Warren, Ohio in 2019. GM propulsion plants in White Marsh, Md., and Warren, Mich., are also due to close as well.

The automaker did not say the plants would close, but used the term “unallocated,” which means no future products would be allocated to these facilities next year.

On top of the previously announced closure of the assembly plant in Gunsan, Korea, GM will also cease the operations of two additional plants outside North America by the end of next year.

The closures come as North American automakers feel pressure from U.S. tariffs on imported steel and aluminum. Last month, GM rival Ford Motor. Co. reported a US$991 million profit during its third quarter, but said tariffs cost the company about US$1 billion. Of that amount, US$600 million was due largely to U.S. tariffs on imported steel and US$200 million from retaliatory tariffs imposed by China on American vehicles, Ford said.

The restructuring announcement also comes after Canada and the U.S. reached the United States-Mexico-Canada Agreement to replace the North American Free Trade Agreement, after months of strained negotiations.

Under the new trade deal, 40 per cent of the content of automobiles must be produced by workers earning at least US$16 per hour to qualify for duty-free movement across the continent. The agreement also stipulates that 75 per cent of the automobile’s contents must be made in North America in order to be tariff-free.

Last month, as GM reported a US$2.5-billion third-quarter profit, the automaker also said it was aiming to cut costs by offering buyouts to roughly 18,000 white-collar workers with 12 or more years of service. That represented more than one third of the company’s 50,000 salaried workers across North America. Workers had until Nov. 19 to decide, and they would have to exit by the end of the year.

And in July, GM executives said pressure from commodity prices and foreign exchange rates had been more significant than expected and the automaker expected a US$1-billion additional headwind, with the biggest exposure being steel.

Meanwhile, GM’s Barra said Monday the company will be investing in autonomous and electric vehicle technology. Vehicles have become more “software-oriented” and GM will be looking to hire more employees with the “right skill set” going forward, she said.

“You will see us have new employees joining the company as others leave the company,” Barra said.

The changes announced Monday will not impact GM’s new trucks and SUVs, which are Barra said are “doing very well.”

The Oshawa plant, however, has been producing an older model, she said.

“Oshawa is building the previous generation trucks that are very helpful in the crossover period… As we’re transitioning to the new truck architecture,” she said.

The timing of the decision was surprising, but not the decision itself, said Dennis DesRosiers, president of DesRosiers Automotive Consultants. He pointed to the steep production decline over the past 15 years from nearly a million units to roughly 148,000 units in 2017.

“The writing has been on the wall for quite some time so it was a matter of when not whether they would make this move,” he said in an email.

The decision is “devastating” for workers at the plant and auto suppliers, but Oshawa has adapted over the years and will survive this as well, DesRosiers added.

In addition to the Oshawa assembly plant, GM has an engine and transmission plant in St. Catharines, Ont. and the CAMI Assembly plant in Ingersoll, Ont.

Ontario Premier Doug Ford said it was a “difficult day” for the Oshawa plant workers, Ontario auto part suppliers and their families.

The provincial government has begun exploring measures to help impacted workers, businesses and communities cope with the “aftermath of this decision,” including a training program to help local workers to regain employment as quickly as possible, Ford added.

Mall parking lot crashes peak in December; ICBC provides Drive Smart tips for holiday shopping season

Source: ICBC:

As the holiday shopping season officially kicks off this week for Black Friday, ICBC is asking drivers to prioritize safety over finding the perfect parking spot. About 150,000 crashes happened in parking lots last year resulting in 5,400 injuries*.

While most parking lot crashes happen at low speeds and only result in vehicle damage, dealing with the aftermath of a crash is the quickest way to turn anyone into a Grinch. ICBC receives hundreds of thousands of vehicle damage claims every year, with costs exceeding $1.5 billion.

Based on a sample of mall parking lots in B.C.***:

  • An average of 200 crashes occurred at mall parking lots in 2017.
  • Most crashes occur in December.
  • Most crashes occur between 12 p.m. and 3 p.m.
  • Most crashes occur on a Friday or Saturday.

Although some mistakenly believe that driving in parking lots is ‘safer’ due to lower travel speeds, drivers need to continue practicing their safe driving habits, even while travelling in parking lots. Parking lots present drivers with unique challenges such as increased congestion and heavy pedestrian activity. The holiday season could add a layer of distraction with people more apt to be preoccupied with their shopping list or finding a parking spot.

Drivers are encouraged to apply a bit of holiday cheer, be courteous and have a bit more patience during this time of year with these Drive Smart tips from ICBC:

The rules of the road still apply, even on private property: Drivers should know that the law still applies, even in mall parking lots. Avoid cutting diagonally through a lot – travel only in the appropriate lanes. Don’t use your phone while driving, instead, program your navigation or holiday tunes before you start your car.
Have your car facing out in your parking spot: This position is safest for drivers because it helps you avoid the risk of reversing into a lane with potential blind spots when leaving.
Park further away, if you can: Instead of circling endlessly to get a spot that’s closest to the mall entrance, pick a spot that’s further away. You’ll avoid a high-traffic area where you’re more likely to crash with another vehicle or hit a pedestrian.
Slow down and be on alert: Drivers should drive slowly in parking lots to have enough time to react to an unexpected vehicle backing out of their parking spot or an unanticipated pedestrian, especially young children, who may be harder to see.
Pay attention to the arrows and stop signs: Many parking lots are quite narrow, restricting certain lanes to a single direction. Pay attention to the signs and markings on the road to avoid getting into a crash.
Don’t block traffic: Deciding to follow a shopper, then waiting for them to load their car, buckle up and leave, jams up traffic behind you and likely takes you much longer than if you had just found a spot further away. Sitting idle in a lane can leave you vulnerable to a collision, and you could be blocking other drivers who are trying to leave.

Let it go: No sense in having a showdown with another driver for a parking spot. Move along, and maybe that good karma will net you something really nice this season.

The number of crashes in B.C. peaked in 2017, with 350,000 crashes happening in the year, or 960 a day. The total cost of claims in 2017 was $4.8 billion, or $13 million a day.

IBC Issues Position Paper on Automated Vehicles

Source: IBC

During its annual Regulatory Affairs Symposium this month (November 2018), Insurance Bureau of Canada (IBC) released a position paper, Auto Insurance for Automated Vehicles: Preparing for the Future of Mobility.

The recommendations in the paper were developed over the past two years by auto insurance experts, who in turn, received input from a panel of legal advisors. IBC would like to thank the insurer representatives who worked on developing the recommendations in this paper, as well as the panel of legal experts who advised them.

The paper contains three recommendations that update both provincial insurance laws and federal vehicle safety standards:

  1. Establish a single insurance policy that covers driver negligence and automated technology malfunctions to facilitate liability claims;
  2. Establish a legislated data-sharing arrangement between vehicle manufacturers and vehicle owners and/or insurers to help determine the cause of a collision; and
  3. Update the federal vehicle safety standards to address new technology and cyber security standards.

“Automated vehicles are coming to Canada’s roads, and the laws that govern insurance and vehicle safety need to be updated to reflect this reality,” said Don Forgeron, President and CEO, IBC. “We need changes to the provincial insurance laws across the country to ensure that collision victims continue to be compensated in a timely manner.”

Each province has a prescribed auto insurance policy and supporting laws that are not yet designed for automated vehicles. Currently, they are built on the notion that human error is the primary cause of collisions. As humans cede control of driving to automated technology, the collisions that do occur will be caused increasingly by product malfunction. The current laws will create uncertainty and confusion for some people injured in collisions that involve automated vehicles, possibly delaying treatment for their injuries and claims payouts.

Several major auto manufacturers expect to have automated vehicles available for purchase in the early 2020s. IBC is asking governments across the country to update relevant laws, to ensure we are ready when automated vehicles hit the roads.

Ride hailing group says B.C. model looks a lot like expanded taxi industry

A coalition of businesses and interest groups advocating for ride-hailing in British Columbia says legislation introduced this week will just create an expanded taxi industry, not the ride-hailing services that customers expect.

At the same time, one academic studying ride-hailing says the regulations proposed in British Columbia aren’t anything the industry hasn’t seen before.

Ian Tostenson of Ridesharing Now for BC said Tuesday, November 20, 2018 the organization’s members are “bewildered” that the future of ride-hailing in the province remains uncertain and the government hasn’t committed to a start date for the service.

The coalition is especially concerned that the Passenger Transportation Board would have power to limit the number of drivers on the road, where they can drive, and also set rates, said Tostenson, who also represents the BC Restaurant and Food Services Association.

“For those who understand ride-sharing, I always see it as an accordion, that the consumer drives how many cars are on the road at any point in time to handle the demand,” he said at a news conference in Vancouver.

“What we heard (Monday, November 20, 2018)) was a system that the transportation board is going to determine how many cars are on the road in any particular area at any particular time, which completely defeats the purpose, we think, of ride-sharing.”

Transportation Minister Claire Trevena introduced the legislation Monday, November 20, 2018 saying it balances consumer demand and public safety.

It proposes to give the Passenger Transportation Board expanded powers to accept applications and set terms and conditions for licences covering taxis and ride-hailing services like Uber and Lyft, she said. The independent tribunal would also have the authority to set rates and determine the number and coverage areas of the services.

A legislative committee to review and make changes to the system would also be appointed, she added.

Timothy Burr Jr., director of public policy for ride-hailing company Lyft, said the company sees the legislation as a “procedural step forward” but the regulation and rule-making process will come next.

Some of the regulations proposed, such as a requirement that drivers have a class four commercial licence, would limit the company’s ability to deliver “true” ride-hailing by making it onerous for drivers to sign up and comply, he said.

“Class four ignores the reality of how true ride-sharing would work. At Lyft, over 93 per cent of our drivers drive fewer than 20 hours (per week). These are folks who are looking for part-time economic opportunities and they want to use Lyft as additional income,” he said.

The company is used to working with legislators and regulators in many jurisdictions and remains committed to working with the B.C. government to bring the service to the province, he said.

But Shauna Brail, associate professor in urban studies at the University of Toronto, said British Columbia isn’t reinventing the wheel by regulating the industry.

Edmonton was the first Canadian city to regulate ride-hailing in 2016 and now 20 of Canada’s 30 largest cities have some form of regulations governing the operation of the services, she said.

“It’s possible that it’s a combination of a number of features from other jurisdictions that don’t all exist (elsewhere) as one set of regulations, but none of these are particularly brand new,” she said.

In August, New York City voted to cap the number of ride-hailing cars on the road after some studies showed congestion increased after the service was introduced, rather than decreased as expected, she said.

Brail agreed that controlling rates is more in line with the taxi industry than typical ride-hailing models. But Toronto charges companies like Uber a set fee per transaction, she said.

After Uber began operating in Edmonton, it temporarily pulled its service while the city developed an insurance plan for drivers and passengers, she said.

While British Columbia has been slow to join the game, Brail said, in some ways it has had the benefit of learning from others’ experience.

“They skipped over ride-hailing 1.0 and they’re at ride-hailing 2.0,” she said.

Cars and trucks sold in B.C. by 2040 will be zero emission: government

All light-duty cars and trucks sold in British Columbia will be required to be zero-emission vehicles by 2040.

Premier John Horgan said Tuesday, November 20, 2108 legislation to be introduced next spring will be aimed at removing a major source of air pollution and climate change.

The government said the proposed law would set targets of 10 per cent of sales by 2025, 30 per cent by 2030 and 100 per cent by 2040.

The premier said the government will increase an incentive program to encourage the purchase of more clean-energy cars by $20 million this year, and it will expand the fast-charger network to 151 sites.

Horgan said the legislation will be the first major policy commitment of the government’s plan to meet the province’s climate goals.

“As a province, we need to work together to put B.C. on a path that powers our future with clean, renewable energy and reduces air pollution,” he said.

Green party Leader Andrew Weaver said 40 per cent of household emissions in B.C. come from transportation and scientists worldwide have been warning for decades about the importance of dealing with greenhouse gas emissions.

“Here in British Columbia, the government has recognized that we have a responsibility to do our part and those who are early adopters are seen as leaders and stand to benefit from the opportunities created by innovation in the new economy.”

Weaver said once people get into an electric vehicle, they never go back.

Clean Energy Canada said in a statement the government’s announcement will make it easier for people to go electric.

The group’s executive director, Merran Smith, said a third of B.C. residents expect their next car to be electric.

“Not only do electric cars help cut pollution and clean up the air we breathe, in B.C. going electric cuts your fuel bill by three-quarters.”

The government said it would be reviewing the incentive program with an eye to expanding it over time, so buying a zero-emission vehicle will become a more affordable option for middle- and low-income residents.

The provincial government has committed more than $71 million to its Clean Energy Vehicle Program since the budget update in September 2017, encouraging residents to purchase green vehicles.

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