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.