Cabinet OK’s elimination of minimum finance test for public auto insurer: Eby

The minister responsible for British Columbia’s financially challenged public auto insurer says the government has suspended regulations that had forced the Crown agency to meet minimum financial tests.

David Eby said Wednesday that the provincial cabinet approved the suspension of financial capital test rules to allow the Insurance Corporation of B.C. to appear before the provincial utilities commission and start its plan to restore financial stability.

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

Last week’s B.C. budget forecast a loss of $1.3 billion at the Crown corporation this year.

Eby had earlier described the financial situation at the corporation as a “dumpster fire” that resulted from previous inaction to address rising claims costs by the former Liberal government.

The former government also took money from the insurer’s accounts to fund other government programs, he said.

Last month, Eby outlined a series of changes at the corporation to try to restore it back to financial health, including limiting awards for pain and suffering to $5,500.

Before the rules were changed this week, the corporation was supposed to have enough money in the bank to cover 100% of all its claims, but that amount currently sits at 54%, Eby said.

“So, we had to change the rule in order to appear in front of the utilities commission to lay out the changes we’re doing with ICBC to get back on track financially.”

He said now that the technical changes have been approved, the agency can apply to the B.C. Utilities Commission for approval of rate increases between 6% and 8% that were granted last year on an interim basis.

Eby said the government will introduce legislation in the coming weeks to bring in the changes it believes will improve the Crown corporation’s finances.

“It has been due to escalating claims and the failure of the previous government to put the changes in place to get legal costs and auto body costs under control,” he said.

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This story was originally published by Canadian Insurance Top Broker.