What a bloody mess the B.C. Liberals have made of British Columbia’s public auto insurance company.
As Attorney General David Eby confirmed in today’s new conference, ICBC is a mangled wreck in which all B.C. taxpayers are now trapped.
We’re all shocked and sitting in disbelief, just waiting for the NDP to apply the “jaws of life” that might get us out of our current predicament, hopefully, before that broken jalopy we that love to hate really goes up in flames.
Time is of the essence.
The company lost $935 million in the first nine months of this fiscal year. It is now projected to incur an operating deficit of $1.3 billion for the full year.
Yesterday it reported that its large loss claims were up 80 percent, at an average cost of $450,000 per claim, with injury claims costs up about $1 billion in the last three years alone.
To remedy that disaster, which can be squarely laid at the feet of the former Liberal government, Eby warned in no uncertain terms that major corrective actions are on the horizon.
Thanks to the Liberals’ nonfeasance, we are all about to be made ICBC’s crash test dummies.
That sound you hear is your head exploding with anger at the new measures that the NDP will be obliged to impose for our own good and for improving the integrity of ICBC.
They are sure to test all motorists’ patience and pocketbooks.
They will include most of the seven pages worth of recommendations that were apparently suggested to the former Liberal government in a 2014 draft report by Ernst & Young.
By now you probably know that then-finance minister Mike de Jong took it upon himself to doctor that report, to remove those pages, and to unilaterally reject those recommendations for ideological and/or partisan reasons.
If that wasn’t nefarious enough, according to Todd Stone, those findings were deleted from the document before it even hit his desk. And he was the guy who actually commissioned the report, as the transporation minister responsible for ICBC.
Welcome to the Liberals’ own sordid take on “no fault” auto insurance.
“It’s not our fault,” they mewl. “We took appropriate corrective action.”
They all plead innocent to the calamity they created, which now threatens to cost all motorists perhaps hundreds of dollars more per year in higher insurance premiums.
Essentially their defence is that it was “only” their sheer incompetence and ideological stupidity that drove them to drive ICBC into the ditch, as opposed to duplicity and malice.
In yet a further twist that makes this incredibly sordid saga even more absurd, Eby has now had to go cap-in-hand to beg the offenders’ permission to release that draft report that they withheld from the public and from their caucus colleagues.
De Jong and Stone have to give their permission—if you can believe it—to allow the NDP to release the findings that they paid for with taxpayers’ money and then actively suppressed from public inspection or from government consideration.
In what altered universe does that remotely make sense? And if that permission is not forthcoming, under the rules, it will be 15 years before those privileged cabinet documents are released, if ever.
Remember as well, de Jong is the self-styled “champion” of openness and transparency.
Yet this was his response today on CHNL radio:
“There are cabinet document confidences that need to be respected unless Mr. Eby’s view as attorney general now is that all cabinet documents are open season. That is interesting because he took an oath to the contrary. If Mr. Eby wants to look at a document and respect those confidences, I don’t have any problem with that.”
In other words, Eby can see that draft report that de Jong doctored, but presumably ICBC ratepayers won't be able to do so. So much for Open Mike. He ought to be ashamed.
If he and Stone won’t immediately give their consent to release now what they refused to release in 2015, the law should be changed to prevent any such future abuse of cabinet power.
Now those two central characters who were behind the wheel in that debacle are both hoping to be rewarded in the Liberal leadership vote next Saturday.
Worse, they are quietly smirking to themselves at the longer term political fallout of their overt negligence and of their inexcusable abdication of responsibility in properly managing ICBC.
Why? Because they know that no one likes to be a crash test dummy, regardless of who is to blame for putting them in that position.
The measures that the NDP must now take to put ICBC back on the road to recovery will be painful and unpopular, as Eby has acknowledged.
It won’t be easy raising rates as need be, or capping payouts for soft injury claims, or ramping up enforcement measures that will piss off many voting motorists who will feel that the tougher new punishments are disproportionate to their crimes.
It won’t be easy to put in place higher deductibles, reduced monetary and other benefits, or even more cameras to catch speeders at intersections.
It won’t be easy for the NDP to take on personal-injury lawyers with changes that stand to cost them a bundle in lost business and earnings.
You want to know why the Liberals really feared to do what was right?
Follow the money. They didn’t dare offend the ambulance chasers who contributed so much to their campaign coffers. The legal community gave millions of dollars to help buy the Liberals’ obedience in resisting desperately needed changes to ICBC that it opposed.
The Liberals are hoping that it will be Premier John Horgan and the NDP that will pay the biggest political price for pounding ICBC’s structurally compromised frame back in shape.
They are hoping that B.C. voters will ultimately blame the NDP for whatever ICBC is forced to do because of the Liberals’ dereliction of duty.
Sick as that is, it is not beyond the pale.
The next election is not scheduled to take place until 2021. By that time, nearly four years hence, public anger at ICBC may well default to the government that was saddled with fixing the Liberals’ failings.
Hence Eby’s extraordinary current effort to keep that public anger properly focused where it belongs.
The Socreds did it years ago, in defining the NDP’s supposed mismanagent of ICBC under the Barrett government. The Campbell government did it again, in 2002, citing a $140-million ICBC deficit in justifying its sweeping changes to cut costs and open the way for private competition in optional insurance.
Meanwhile, B.C. Green party Leader Andrew Weaver won’t miss a beat in trying to convert motorists’ ire at ICBC to his own party’s advantage.
Only minutes after Eby concluded his press conference, Weaver was on CKNW, effectively contending that “all options should be on the table”, including an open public debate on the merits of privatizing ICBC.
Eby made it very clear that that option is off the table for the Horgan administration, as is no-fault insurance.
That will probably not sit well with many B.C. motorists, including readers of my last piece in the Straight, who offered comments calling for ICBC’s privatization.
Whatever your personal position and preference might be on that issue, I would urge you to read this new analysis from MNP, entitled The Benefits of Competition in the Provision of Automobile Insurance in BC, which was commissioned by the Insurance Bureau of Canada.
Mind you, not because I endorse it, which I most certainly do not.
Indeed, I only wish that the NDP would also repost on the government website the open cabinet presentation from November 2002 that last seriously considered privatizing ICBC.
Sadly, that presentation along with the supporting cabinet documents that were discussed by the Campbell government and by ICBC’s then-CEO, the late Nick Geer, were all quietly removed from public inspection by the Clark government.
Arguably, the changes that resulted from that cabinet deliberation are largely also responsible for ICBC’s current state.
Many of those changes were subsequently compromised. The government started leaning on ICBC to pay for costs the government should have borne and it began treating it like a cash cow, just as it did other Crown corporations.
The Liberals took $1.3 billion out of ICBC’s profit piggy bank as “dividends".
They began cross-subsidizing basic insurance with optional insurance earnings, in violation of the policy.
They politically interfered with the independent regulator, in making rate decisions. The Liberals put that under the B.C. Utilities Commission's authority to supposedly prevent such cabinet interference, after the previous NDP government had frozen ICBC rates for six straight years.
And that’s not the half of it.
First the government compromised ICBC’s fiscal health by opening up the more profitable optional side of the auto insurance business to private competition. Then it tied ICBC’s hands by preventing it from using its own optional insurance profits to “cross-subsidize” basic auto insurance and keep those rates lower.
It effectively gave private insurers a huge gift at the expense of ratepayers, in part, to produce phony “profits” that were scooped by government for its own purposes.
Certainly, those changes and others had no shortage of critics, including the Consumers Association of Canada. It also offered a worthy critique and a prescription for “fixing ICBC” in 2013, which the Clark government also ignored.
Still, if you think that privatizing ICBC is the answer, take close look at the January 2018 MNP analysis. It inadvertently makes its own arguments against that, at least for certain classes of motorists.
It offers lots of good information about how other jurisdictions’ auto insurance sectors operate.
Of particular note, for me, was MNP’s calculation in Table 12 on page 35.
It suggests that, under a “full competition scenario”, ICBC premiums would hurt younger drivers especially hard.
Average rate costs might rise by 37 percent for drivers under 20, to $2,600 annually. By 24 percent for those 20 to 24, to $2,100. And by 18 percent for drivers age 25 to 34.
The big winners, would be those over 55, who might see their premiums cut by 18 percent.
Perhaps more surprising to me was MNP’s recommendation to introduce “a $5,000 cap on awards for pain and suffering associated with minor injuries”.
That should come as music to Eby’s ears, since that is pretty much what he is proposing. And as MNP’s report shows, it is also consistent with what is already the case in most other provinces.
MNP found that, based on its assumptions, “a $5,000 cap was estimated to result in a reduction in claim costs of between $300 million and $380 million and a reduction in basic premiums of between $110 and $145 per policy”.
That’s not chicken feed.
But even those estimates would only account for a fraction of the $1.3 billion that ICBC needs to find to negate its currently project operating deficit.
Do British Columbians want to move further toward a private auto insurance model, as the Insurance Bureau of Canada suggests?
Do they want to go that route, to also invite greater “bundling” of insurance products that will supposedly lower some motorists’ rates?
Where have I heard that before, that “bundling” works to our tremendous advantage?
Oh, yes. That’s what the large telecoms argue.
We will all save “big” if we bundle our Internet, cable, telephone, and mobile services under their “low cost” platforms.
Just don’t accuse them of collusion or price-fixing. We know they don’t do that.
It is just the “free market” that makes such “great deals” possible, don’t you know, even if it happens that they all price their products at pretty much the same rates.
Would our future be any friendlier if we opened up the market for basic auto insurance as we have with optional insurance?
I wouldn’t bet on it.
Sadly, the financial and real-life consequences of the Liberals’ negligence and deceit in respect of ICBC will be with us for some time.
That $1.3-billion deficit it's facing?
It is over a billion dollars higher than the $225 million hole that the NDP pegged for ICBC in producing its updated budget. Coincidently, that budget projected a $246-million surplus, net of the $300-million forecast allowance.
Eby was right to suggest that a one-year transfer of money from general revenue to ICBC’s coffers won’t do much of anything to help structurally lower it runaway costs.
It also won’t help at all with balancing the budget. Either way, that $1.3 billion deficit will still impact the province’s bottom line.
With an added and unexpected budget pressure of over $1 billion than contemplated from ICBC, I will be the first to forgive Finance Minister Carole James if she is unable to balance next budget as forecast. That, too, will be on the Liberals.
ICBC’s annual costs are completely out of whack with its revenues, and getting worse.
The Liberals might take us all for crash test dummies, hoping that we will forgive them for this debacle come the next election.
Like any good driver, we need to all keep our eyes on the road, which is a road to ruin for ICBC that they created.
It is the Liberals who are to blame for whatever nasty surprises await, and voters should never lose sight of that fact.
Always remember, it was the Liberals that very nearly drove ICBC off the cliff, not the NDP.More