Sarah Leamon: How can ICBC be saved from financial oblivion?
Between wildfires, the fentanyl crisis, the impending legalization of marijuana, and the rising cost of already unaffordable housing, our provincial government has a lot on its plate already…and now more.
A troubling report released last week indicates that ICBC is in the midst of a major financial crisis.
This should come as no surprise to anyone who has been paying attention. Each year, ICBC insurance premiums seem to increase steadily. Insurance agents tend to quote a never-ending stream of litigation as the sole culprit for these hikes, but that seems unlikely.
Significant structural problems are also ostensibly to blame—and the report confirms this.
The report, prepared by Ernst & Young and ordered by former transportation minister Todd Stone, provides some insight into the troubles facing the Crown corporation.
It ultimately concludes that, if things stay the same, already unaffordable insurance rates are going to climb higher—much higher—in the very near future. It estimates that they could rise as much as 30 percent over the next two years unless drastic action is taken in order to overhaul ICBC.
What does this mean to you? The average driver in our province will have to pay nearly $2,000 in annual premiums for car insurance by 2019.
As the cost of living in the Lower Mainland steadily soars, many of us are understandably concerned about the prospect of having to pay more for insurance on top of everything else. This is particularly so when we consider that ICBC has some of the highest insurance rates in the entire country.
If you're outraged, you aren't alone. Attorney General David Eby has already spoken out to express his discontent with the report's findings.
He blames the former B.C. Liberal government for leaving ICBC in such a financial mess. He has described the financial decline of the Crown corporation as a "very serious and very grave concern". He believes that years of ignoring the problem has only served to make it worse, and has ultimately left ICBC in the peril it finds itself today.
But placing blame aside, Eby has vowed to take the necessary steps to fix the problem. He has said that he wants to ensure that all British Columbians are able to access affordable, comprehensive insurance options.
But how exactly does Eby plan on doing this? How can a lumbering juggernaut like ICBC be pulled back from the brink of financial oblivion?
While the Ernst & Young report refrains from making any formal recommendations about how to solve the crisis, it suggests some measures that could be used to raise revenue and offset costs.
This suggestion, however, may only create more problems than it solves as ICBC continues to spiral.
Imposing more fines on more people is nothing more than a repackaged, ramped-up version of more traditional money-grabbing techniques, which ICBC has not been shy about using in order to generate revenue in the past.
Over the past decade, ICBC has benefited from numerous legislative changes to the Motor Vehicle Act, all of which impose higher fines on drivers charged with minor infractions such as using a mobile device while driving, for example. In spite of this, however, it still finds itself in trouble.
The idea of creating more fines, more penalty premiums, and more surveillance for no good reason certainly cannot bode well for drivers who are already feeling financially tapped out.
But Eby has promised not to jump on the first suggestion to save the struggling corporation. He has said that there are many avenues to explore to foster sustainability in the future.
Other suggestions include refusing insurance for luxury vehicles worth more than $150,000.00, capping payouts to people who have suffered minor injuries or soft-tissue damage in a motor vehicle accident, and settling more claims out of court.
Whatever our government decides to do, though, it is clear that a piecemeal approach to this problem simply won't work. The solution to ICBC's financial crisis will have to involve massive internal restructuring in order to address the central issues that have consistently plagued it throughout the years.
Otherwise, the juggernaut will fall.More