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ICBC records huge losses, paints grim picture of future finances

Last Updated Jan 28, 2018 at 12:53 pm PDT

(Photo by Dustin Godfrey for NEWS 1130)
Summary

ICBC says losses will go beyond the $1 billion mark by the end of the fiscal year in March

BC's insurance company blames spike in claims as it struggles to balance the books

VICTORIA (NEWS 1130) – It doesn’t look like things are getting any better at ICBC as it falls deeper into the red. The insurance corporation says, according to its own numbers, it’s posted a net loss of $935 million for the first nine months of the fiscal year, which ran from Apr. 1st to Dec. 31, 2017.

“This is obviously a sizeable and significant loss, and is further evidence of the growing financial pressures we are under from the rapid increase in the number of crashes occurring across BC,” says ICBC in a statement.

It’s blaming the numbers on a surge in claims and the growth in the costs of those cases. “Our projected net loss for our full 12-month, fiscal year (ending Mar. 31, 2018) now stands at almost $1.3 billion.”

It adds, the current trend is not sustainable as net claim costs for the first nine months of the current fiscal year have totalled $4.25 billion. “Simply put, the amount of premiums we are collecting from customers is not covering the ever-increasing amounts we are paying out in claims costs.”


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ICBC says the number of crashes, year after year, continues to spike and it’s leading to thousands of more claims annually. “On top of that, the costs of those claims are ballooning. After only breaking through the $2 billion threshold as recently as 2014, our injury claims costs are now closer to $3 billion a year. This is not to mention the increasing cost of vehicle repairs and the emergence of additional, major pressures.”

The agency goes on to explain that in recent months, it has seen a lot of really costly claims which are costing hundreds of thousands of dollars in some cases. “In particular, older claims — some dating as far back as 2010 — which were initially presented as minor injury claims have since emerged as more complex and costly, large loss claims. Over the past 12 months, we have experienced an unprecedented 80 per cent growth in large loss claims which have an average cost of $450,000 per claim,” reads the statement.

ICBC Statement of Operations 2017

 

Last November, car insurance rates were hiked 6.4 per cent, a move that was described as “drastic action” by Attorney General David Eby who says he’s trying to fix the financial problems plaguing the insurer. For the average driver, that means an increase of about $60 a year.

Former Premier Christy Clark had promised to freeze rate hikes at five per cent.

Eby and the provincial government say they know ICBC is a facing a major crisis and last fall hired one of Canada’s leading accounting firms, PwC Canada, to audit the crown corporation.

Last year, NEWS 1130 exclusively reported on body shops inflating repair costs and that was a factor in the numbers.

Many have pointed the finger at the former BC Liberal government for ignoring signs that ICBC was in trouble when the party was in power. However, former Transportation Minister Todd Stone has said “concerns related to potential over-billing at body shops were never brought to my attention.”

Eby is set to hold a news conference at 11 a.m. on Monday in Vancouver to address the numbers.