B.C. to introduce auto insurance pay-out limits in 2019 to save $1B annually

Years of reckless decisions by the previous British Columbia Liberal administration have thrown the public auto insurer into chaos and forced the government to place a cap of $5,500 on accident pay-outs for pain and suffering, Attorney General David Eby says.

Eby said Tuesday the Insurance Corporation of B.C. was created to provide affordable insurance to all drivers in the province, but decisions and inaction by the former Liberal government led the corporation to a projected net loss this fiscal year of $1.3 billion.

Related: Reactions to ICBC’s “financial dumpster fire”

“Today we start making the tough decisions that will stem ICBC’s losses, keep insurance affordable and provide enhanced care for people injured in automobile accidents. We’re going to make ICBC work for people again.”

Eby said the settlement limit on injury claims will not take effect until April 2019, as part of legislation to be introduced by the NDP government.

Without these actions, Eby said B.C. drivers could face insurance premiums averaging $400 or more.

“For too long, difficult decisions have been put off and growing financial problems at ICBC hidden from the public,” he said. “The changes we’re initiating today will reduce ICBC’s claims costs by more than $1 billion every year, helping make it sustainable for decades to come.”

The B.C. Liberals have said the NDP government are looking to lay blame instead of taking responsibility. A third-party review of ICBC was ordered by the Liberal government and was on Eby’s desk in July, but he delayed action and allowed the problem to grow worse, the party said last week.

Immediate changes introduced Tuesday include doubling the amount of money available for care and recovery for accident victims to $300,000.

The government said the cost of pain and suffering claims has increased by 265% since 2000 and B.C. is the last province in Canada to place a limit on such claims.

Eby said the average amount of claims for minor injuries adds up to $30,038 per person, with pain and suffering pay-outs averaging $16,500.

An independent dispute resolution process for certain injury claims will also be established.

The government says the changes will reduce the amount the corporation spends on legal fees and expenses, which have grown to consume about 24% of the budget.

Eby said he will announce a program to review insurance rates within weeks, but did not say when drivers can expect changes.

“The system is disconnected from driver behaviour,” he said. “We want to fix that. We want to reconnect driver behaviour with the rates they pay.”

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This story was originally published by Canadian Insurance Top Broker.