[Timpo]

ICBC faces growing financial crisis

Times Colonist
June 8, 2016 12:00 AM

ICBC faces growing financial crisis (http://www.timescolonist.com/opinion/letters/icbc-faces-growing-financial-crisis-1.2272713)

Last week, the provincial government allowed the Insurance Corp. of B.C. to quietly release its annual report for 2015. There was no fanfare and not even a press release from the government’s large and eager public-relations crew.

Why? Because our public auto insurer recorded one of its worst financial years on record. The compulsory basic insurance program lost $256 million, while the profit for the overpriced extension coverage rose by $100 million.

Is there greater carnage on our roads? ICBC reports that the number of reported claims actually declined by 9.5 per cent last year. Yet the cost of basic claims jumped by $320 million, or 14 per cent (up 26 per cent in three years), mainly as a result of the escalation in pain and suffering costs. The value of the corporation’s claims backlog climbed to $9 billion, and the corporation’s capital reserve fell to $3.1 billion, which is below the target deemed as safe by the ICBC board.

What is the government doing to address the growing financial crisis at ICBC, besides ordering the transfer of $450 million of optional policyholders capital to the basic program? It is actually making things worse by taking about $500 million in cash over the past three years, and suppressing basic rate increases. The cash helps to reduce the government’s direct debt, and the suppression of rates … well, there is an election in less than a year.

Richard McCandless

Saanich

[Timpo]

ICBC slips out bad news balance sheet
Crown auto insurer’s net income plummets in face of higher claims, cyber security threats, shifting demographics

June 7, 2016, 8:06 a.m.
By Bob Mackin

https://www.biv.com/media/filer_public_thumbnails/filer_public/9d/7f/9d7f152a-b9bf-4574-99ce-1fa5728aaeae/icbc.jpg__0x400_q95_autocrop_crop-smart_subsampling-2_upscale.jpg

https://www.biv.com/article/2016/6/icbc-slips-out-bad-news-balance-sheet/

The Insurance Corporation of B.C. (ICBC) lost $256.8 million on basic coverage last year, according to the Crown auto insurer’s annual report, which was released last week.


The results for the year-ended December 31, 2015, were published in an updated version of the ICBC three-year service plan on its website. Underlying data says the file was modified May 31, but no news release was issued.

“They always publicize the good news; they don’t publicize the bad news. This is very bad news,” said Rick McCandless, a retired former assistant deputy attorney general who studies ICBC. “This current pattern is unsustainable.”

Net income fell from $372 million in 2014 to $131 million in 2015, which was $79 million lower than budgeted.

Said the report: “These decreases are primarily due to higher claims costs partially offset by higher investment income and higher premiums earned.”

It blamed the frequency and cost of injury claims, higher legal and medical costs and more lawyer-represented claims and the number of catastrophic claims, which lead to higher settlements.


In 2014, ICBC reported $87.1 million net income on basic coverage, meaning a negative swing of nearly $344 million in 2015. It did, however, show an optional coverage revenue increase in 2015 of more than $100 million to $387.3 million.

The company had a $666 million underwriting loss on $4.5 billion revenue and $5.21 billion expenses. Investment income of $920 million, more than double what it had budgeted, kept ICBC out of the red in fiscal 2015.

But the company’s basic coverage equity fell to $1.05 billion from $1.63 billion and total equity dropped to $3.15 billion from $3.6 billion. Because of the low-interest rate climate, the Crown corporation admitted that it cannot rely upon investment returns to offset claims costs.

“Typical of other property and casualty insurance companies,” the annual report stated, “ICBC faces other financial and non-financial risks such as changing demographics, increase in sophistication of cyber security threats, natural catastrophes, volatility in investment markets and global uncertainty, all of which we continue to monitor.”

The report added that ICBC’s battle against fraudulent claims has expanded to a cyber crime unit that monitors the Internet and social media. The ICBC special investigations unit opened 5,000 claims investigations in 2015.

NDP critic Adrian Dix said ICBC’s balance sheet would look a lot better had the BC Liberal government not “scooped the financial heart out of ICBC” by transferring $1.2 billion since 2010 to the central government to help it balance the budget.

“Up to 2010, ICBC was largely run as a non-profit automobile insurance company,” Dix said, “and it has been transformed by reducing service and on a political level by becoming a source for the government to raid.”

In the summer 2013 edition of B.C. Studies, McCandless authored a 40-year analysis of political influence on B.C. public auto insurance from 1970 to 2010.

McCandless said whichever party forms government after the 2017 election will be facing a serious problem because ICBC is “becoming more and more expensive and less and less affordable.”

Last fall, ICBC applied for a 5.5% increase to basic insurance rates.

In his 2013 paper, McCandless noted that there have been sporadic efforts to de-politicize the company, “since voters are its customers, it is necessary for all governments to retain influence over its affairs.”

But he said ICBC no longer tries to provide low-cost auto insurance, instead it resembles a commercial operation providing profit to government.

“It seems ironic that, by 2010, the Liberal government, which promised to de-politicize the relationship with ICBC had more control than ever over its operations and rates through various cabinet directives,” McCandless wrote.

[Lomac]

Well maybe if the Provincial government would stop pilfering ICBC's coffers, they wouldn't be in such bad shape.

Just sayin'.

[RabidRat]

Self-driving cars [for the non-enthusiasts] can't come soon enough.

[yray]

leading the way to hike insurance again

[mr_chin]

Now I'm wondering, what would happen if ICBC disappears suddenly?

Private insurance probably won't have as good of a coverage as ICBC. Will we become better driver knowing that insurance coverage is reduced?

As much as I hate ICBC for raping my wallet all these years, I believe they protect us more than they drain the life out of us.

I think ICBC need to focus on investigating frauds and such and fine those who is caught for lying.

[smoothie.]

good.

end icbc.

let the private companies come.

[Nlkko]

Fuck private insurance. No thank you.

[Zedbra]

Private insurance won't be cheaper, especially based on the low population of our province. If you look into other provinces' insurance rates and coverage, you will find the two most cost effective and comprehensive medical coverage come from the two provinces with provincial run auto insurance.

[smoothie.]

Private insurance won't be cheaper, especially based on the low population of our province. If you look into other provinces' insurance rates and coverage, you will find the two most cost effective and comprehensive medical coverage come from the two provinces with provincial run auto insurance.

grass is always greener

$700/year for two cars in Seattle full coverage. I know this isn't realistic for bc, but once the markets are competitive with private offerings I have faith it will be cheaper than icbc.

if you think what you're paying for icbc is fair... then you're part of the problem imo.

using the first result on google without actually looking into sources:

https://www.arcinsurance.ca/blog/average-car-insurance-rates-across-canadian-provinces/

[Zedbra]

grass is always greener

$700/year for two cars in Seattle full coverage. I know this isn't realistic for bc, but once the markets are competitive with private offerings I have faith it will be cheaper than icbc.

if you think what you're paying for icbc is fair... then you're part of the problem imo.

using the first result on google without actually looking into sources:

https://www.arcinsurance.ca/blog/average-car-insurance-rates-across-canadian-provinces/

Now compare those policies to the medical coverage offered within the compared premiums - some start with a $10,000 maximum hospital stay; pretty useless if you break a hip in an accident or worse. So I don't think I'm part of the problem, I think I'm a little more educated on the matter.

Oh - and Ontario topped the list and they are private insurance. Private insurance legally changes their rates based on various personal factors, such as: sex, marital status, where you live, etc. You name it, they will find a way to balance the sheets.

[mr00jimbo]

I always thought ICBC should generate extra revenue by giving multi car discounts like all other insurance companies.
Say you have a daily driver and a toy car for weekends and stuff. Or you have a big truck but want a little Civic to save on gas for work. There should be a way to get a steep discount insuring a second vehicle for pleasure use. More people paying into ICBC, and if people don't drive them much, less risk of them making accident claims.

But I don't think ICBC is rational. I think it's a management-heavy monopoly of the BC government that would lose money selling liquor in a whorehouse.

[6thGear.]

Everyone should keep in mind ICBC has to insure everyone on the road. Private insurance can refuse insurance to anyone. Imagine if the next guy who hits you is not insured, guess what you now have to sue the other driver and if he doesn't have a pot to piss in good luck to you. Yes I realize there's under insured coverage but every private insurance company's policies are all different. Lets not even get started on vehicle repairs from private insurance, if you think ICBC is bad....... but of course there's always pros and cons to having both

[H.Specter]

Self-driving cars [for the non-enthusiasts] can't come soon enough.

Not sure if srs or just stupid.

Insurance companies would very much prefer receiving insurance premiums in exchange for policies that will have extremely low possibility of accidents/not having to pay out claims.

[mr00jimbo]

Everyone should keep in mind ICBC has to insure everyone on the road. Private insurance can refuse insurance to anyone. Imagine if the next guy who hits you is not insured, guess what you now have to sue the other driver and if he doesn't have a pot to piss in good luck to you. Yes I realize there's under insured coverage but every private insurance company's policies are all different. Lets not even get started on vehicle repairs from private insurance, if you think ICBC is bad....... but of course there's always pros and cons to having both

Why not allow ICBC to operate with competition then? If the competition sucks, people will use ICBC.
If ICBC sucks, then people will flock to the competition.
The only reason they have to insure everybody is because they're the only one allowed to sell basic car insurance.

Besides, if a driver sucks, ICBC raises rates pretty damn high. Not like they're charging 10 dollars a month.

[tonyzoomzoom]

hard for ICBC to compete when the government keeps pulling on the strings.

[Marco911]

Fraud of people who claim injuries who aren't actually injured is rampant.

[Timpo]

Now compare those policies to the medical coverage offered within the compared premiums - some start with a $10,000 maximum hospital stay; pretty useless if you break a hip in an accident or worse. So I don't think I'm part of the problem, I think I'm a little more educated on the matter.

Oh - and Ontario topped the list and they are private insurance. Private insurance legally changes their rates based on various personal factors, such as: sex, marital status, where you live, etc. You name it, they will find a way to balance the sheets.

yeah that's kinda true.

In the states, you can typically insure a car for $300/year, but maximum coverage is usually $10,000 to $50,000 for third party liability and all that.

ICBC will cost you $3,000+/year for exact same car, but it's very typical to see people driving around with at least a few million $ coverage.

[Timpo]

Private insurance won't be cheaper, especially based on the low population of our province. If you look into other provinces' insurance rates and coverage, you will find the two most cost effective and comprehensive medical coverage come from the two provinces with provincial run auto insurance.

Not true.

Unless BC makes a law that private insurance company can ONLY operate in BC, we will most likely have insurance company from all over Canada or North America.

Those private insurance company does not have to strictly stay in BC, they will probably have a huge customer base all over North America or Canada. Whereas ICBC's customers are strictly for BC residence.

Also, let's face it. It's no secret that people in BC hate ICBC (generally). Maybe it's time for a change?

[Zedbra]

Not true.

Unless BC makes a law that private insurance company can ONLY operate in BC, we will most likely have insurance company from all over Canada or North America.

Those private insurance company does not have to strictly stay in BC, they will probably have a huge customer base all over North America or Canada. Whereas ICBC's customers are strictly for BC residence.

Also, let's face it. It's no secret that people in BC hate ICBC (generally). Maybe it's time for a change?


Ontario has 13 million population, almost half the country, and private insurance. Average male will pay $50k more in their lifetime for similar car insurance versus ICBC. I fail to see how our 3.3 million population will be treated better than a significantly larger population base, but I guess you can have hope and forget data.

[smoothie.]

Everyone should keep in mind ICBC has to insure everyone on the road. Private insurance can refuse insurance to anyone. Imagine if the next guy who hits you is not insured, guess what you now have to sue the other driver and if he doesn't have a pot to piss in good luck to you. Yes I realize there's under insured coverage but every private insurance company's policies are all different. Lets not even get started on vehicle repairs from private insurance, if you think ICBC is bad....... but of course there's always pros and cons to having both

That's what lawyers are for. They seem to be fine in the US. If you're lazy and want ICBC to take care of absolutely everything in the process then you've got to pay for it.

Now compare those policies to the medical coverage offered within the compared premiums - some start with a $10,000 maximum hospital stay; pretty useless if you break a hip in an accident or worse. So I don't think I'm part of the problem, I think I'm a little more educated on the matter.

Oh - and Ontario topped the list and they are private insurance. Private insurance legally changes their rates based on various personal factors, such as: sex, marital status, where you live, etc. You name it, they will find a way to balance the sheets.

Yeah, we don't have to worry with the medical bills they do in the states, so I'm OK with less coverage here. Optional coverage is just that, optional. If you're unlucky enough to need more coverage than you have, then youre SOL. Private can change rates and choose not to cover you, but ICBC wants to raise rates all day and spew bs about rate reductions when really they're just going up as well.

For what it's worth I've been on the giving and receiving end of ICBC claims, and the straight forward dealings have been ok, but like any other insurer, the payout is where the complications start.

Like I said, the grass is always greener :badpokerface:

[Timpo]

Ontario has 13 million population, almost half the country, and private insurance. Average male will pay $50k more in their lifetime for similar car insurance versus ICBC. I fail to see how our 3.3 million population will be treated better than a significantly larger population base, but I guess you can have hope and forget data.

The population has nothing to do with it. (Btw Google says BC population is 4.3 million)

If private insurance companies were allowed to enter BC market, I don't see how they're going to charge more just because we're in BC.
That's like saying TD Bank will charge more for banking fees just because BC has less population.

The only reason why they would charge more, would be if BC has significantly more probability of getting into an accident.

Although I do not have a data, I heard BC is safer than the rest of Canada due to much less snow we have here.

[Mancini]

grass is always greener

$700/year for two cars in Seattle full coverage. I know this isn't realistic for bc, but once the markets are competitive with private offerings I have faith it will be cheaper than icbc.

if you think what you're paying for icbc is fair... then you're part of the problem imo.

using the first result on google without actually looking into sources:

https://www.arcinsurance.ca/blog/average-car-insurance-rates-across-canadian-provinces/

Full coverage means different things even assuming the same collision, comp and third party liability coverage.

Accident benefits are vastly different and usually much lower than in BC. icbc's process is positively steamlined compared to some private insurers.

That being said I think icbc has a broken culture.

[melloman]

Fraud of people who claim injuries who aren't actually injured is rampant.

I'd like to bring this up for people who just skipped over this.

I doubt ICBC is willing to release these statistics, but I can almost surely gaurentee that people making basic claims and claiming injury is up. This directly causes ICBC to have lawyers get involved, which is not cheap.

I'm also all for ICBC getting the boot.
$2000/year for an 08 Mazda3, and spotless driving record is stupid.

[Traum]

I'm also all for ICBC getting the boot.
$2000/year for an 08 Mazda3, and spotless driving record is stupid.
No way it is that high if you are on full discount.

[jasonturbo]

BC is quasi-private, only the first 200K of third party liability must be provided by ICBC, any additional coverage can, and typically is provided by private insurers operating within the Province.

Unfortunately this means ICBC eats the bill for virtually all bodily injury claims, which is the main issue. There is well established framework for injury claims that is easily navigated by the local legal community, this results in a very high rate of success pursuing BI claims.

Meh, having been in Provinces both private and public I feel the rates are fairly comparable - the level of customer service with ICBC is much higher though IMO.

[nsx042003]

Meh, having been in Provinces both private and public I feel the rates are fairly comparable - the level of customer service with ICBC is much higher though IMO.

That is true, if only ICBC gives multi discounts on vehicles, I actually like how ICBC works. Insurance premium will always differ between private companies because of their coverage differences... in a sense, ICBC unified all that and protected us that way.

Just fuck all those mofo claiming pain from a 5mph hit. fuck off

[hud 91gt]

Not only are they comparable (and sometimes less), we don't have to deal with seperate registration, plates etc. not to mention it's a one stop shop. Getting estimates
Is a PItA. Icbc isn't perfect, but I'd much rather have it then the other options throughout canada.

[6thGear.]

Why not allow ICBC to operate with competition then? .

That would be ideal but you're still faced with the problem of the other driver not being insured cause they can't get coverage or they can't afford insurance. The fact that you have to get basic through ICBC and still save money through third party, collision, etc is quite good.

That's what lawyers are for. They seem to be fine in the US. If you're lazy and want ICBC to take care of absolutely everything in the process then you've got to pay for it.



Yeah, we don't have to worry with the medical bills they do in the states, so I'm OK with less coverage here. Optional coverage is just that, optional. If you're unlucky enough to need more coverage than you have, then youre SOL. Private can change rates and choose not to cover you, but ICBC wants to raise rates all day and spew bs about rate reductions when really they're just going up as well.

For what it's worth I've been on the giving and receiving end of ICBC claims, and the straight forward dealings have been ok, but like any other insurer, the payout is where the complications start.

Like I said, the grass is always greener :badpokerface:

As if the courts aren't already plugged up with everyone trying to get out of a $119 speeding ticket besides what's a lawyer good for when the other guy doesn't have a penny or own anything. Are you gonna make him your butler?

[ImportPsycho]

I've talked ppl from Ontario, they can't understand how one can bank discounts when not having any vehicle registered under their name. Got a first car since you got your license 10 years ago and have never been in a driver seat since? You get max discounts! How does that make sense? I don't understand it neither but we take it for granted.

[Nlkko]

You don't need to own a car to be driving. So yes that makes sense since there's no way to keep track of whose car you are driving. It could be from a company like car2go or evo. As long as you have no at fault record, you should be treated as a safe driver. It shouldn't matter how much or how often you drive.

Point is companies that provide services to massive scale of customer should not waste overhead on enforcing policies that affect maybe 0.001% of your customers.

[smokinloc]

my sister works front end at a very popular icbc accredited shop in Nanaimo. She told me that she would much rather deal with icbc then some of the private companies that she does have to deal with from time to time. She said icbc would get back to her within a day or so of faxing off paperwork and getting approval for claims, where as she said any of the private companies can sometimes take over 2 weeks for them to get back to her.....

[- kT]

^ this is true, but the overall picture is definitely bigger than that. i complain as much as the next guy about icbc, but after working in the body shop industry, i'm quick to bite my tongue with the complaints. if icbc were to one day cease to exist, it'd be carnage. currently, icbc sets the standard for all insurance related claims + material damage (in BC), but that's just the tip of the iceberg. icbc has problems for sure (what government company doesn't?), but for all their shortcomings, being involved in an accident in BC is a much easier ordeal than being involved in an accident elsewhere in Canada. I can't speak the same for the US, as they have insurers like Geico, who are, from experience, miles above any insurer in Canada, but as somebody above mentioned, the grass is always greener on the other side. the biggest thing is to choose the lesser of all evils, and my flame suit is definitely on, but currently, the way I see it, that's icbc

but yes, the fraudulent injury claims need to be investigated closer and penalized. however that's much easier said than done. how hard of a time would you have simply trying to prove an employee that called in sick is playing hooky?

[Timpo]

oh what the heck is going on??

Until now, I've only heard of ICBC complaints and how people absolutely hate ICBC.

People always say "it's about time to get rid of ICBC" and all that, now that there's a small chance of ICBC going away due to financial issues, people are starting to say how great ICBC really is.

[hud 91gt]

Timpo that's because you live on an island in paradise where no one has ever experienced anything other. This fandagled internet let's you meet people who have seen that partly green yet mostly shit brown grass on the other side.

You'll also get people bitching both sides. I quickly switched my tune when experiencing the Ontario process. Manitoba was similar to BC thankfully.

[Anjew]

value of the corporation’s claims backlog climbed to $9 billion

The 9 billion figure is not what ICBC will have to pay. It is counting cases that have not closed. That's only quotes from lawyers for amounts that will be negotiated down by ICBC.

[mr_chin]

oh what the heck is going on??

Until now, I've only heard of ICBC complaints and how people absolutely hate ICBC.

People always say "it's about time to get rid of ICBC" and all that, now that there's a small chance of ICBC going away due to financial issues, people are starting to say how great ICBC really is.

It's a love and hate thing. It's complicated. You'll understand once you're older son.

[6thGear.]

my sister works front end at a very popular icbc accredited shop in Nanaimo. She told me that she would much rather deal with icbc then some of the private companies that she does have to deal with from time to time. She said icbc would get back to her within a day or so of faxing off paperwork and getting approval for claims, where as she said any of the private companies can sometimes take over 2 weeks for them to get back to her.....

The only way to make dealing with private insurance easy is to become one of their direct repair facility shops but it can be a PITA process. Basically equivalent to a ICBC VALET shop. Not as if people do this but the 2 week process isn't any different if say someone went to a non-accredited ICBC shop.

[meme405]

Speaking of all this, did anyone recently get a call from some telemarketing survey firm talking about ICBC?

This was one of the first times I actually took the stupid 3 minute survey because the person seemed genuine on the other end. She asked like 15 questions, Answer for each question was a range from Very satisfied to not satisfied.

She asked questions related to how I feel about the value and cost of my current premiums, How I feel about ICBC, how my dealings with ICBC have been, etc. etc.

Honestly having only really had experience with what we have here, I don't know anything better, even my work in AB my vehicles have been either insured through the leasing firm, or insured here and driven out there.

[StylinRed]

As Lomac said, if the Liberals would stop raising icbcs coffers to "balance the budget" and if ICBC wasn't allowed to gamble in high risk stocks/bonds/ventures, there wouldn't be an issue

The shame is most people don't realize this goes on and they just assume it's bad drivers or fraudsters

[swiftshift]

Sounds very high for losses..
Hoping to hear more about this

[Spoon]

but yes, the fraudulent injury claims need to be investigated closer and penalized. however that's much easier said than done. how hard of a time would you have simply trying to prove an employee that called in sick is playing hooky?

Let's not forget the cost associated with investigating fraudulent claims. These guys don't work for free. Won't even be surprised if they make a loss in this category. But it's still necessary just to minimize BS claims.

[vitaminG]

i would like to see some sort of no fault system set up like Worksafe. ICBC will cover all your expenses if you are injured but no cash payouts and you cant sue them or other parties.

im sure all the ambulance chasers would oppose this but it would cut down the fraud completely

[EvoFire]

This is a worrying trend. It was only a few years ago that ICBC was noted as great with their financials. The BC Liberal government really fucked with them hard.

I'm all in for keeping ICBC. While dealing with ICBC with my recent accident has sucked, that is more the issue of my modified car than anything. Still, they didn't shut the door on me when I made it clear I wasn't happy with the repairs they authorized, and we are working on a solution.

All my previous experiences have been positive. I can't imagine what it would have been like to deal with a private insurer. With my driving record, despite not being at fault for accidents, would have made it hard for me to get insurance.

It's also important to know that, when I am on the road, I am always protected. I don't have to worry about ICBC denying a claim as long as I wasn't doing something flagrantly illegal. You can bet the farm that a private insurance company with try EVERYTHING they can to weasel out of a claim.

[tonyzoomzoom]

Government has made a financial mess of all the crown corps.