January 29, 2018 by The Canadian Press
The financial crisis at British Columbia’s public auto insurer is deepening, as $1.3 billion in net losses are now projected by the end of the current fiscal year.
The Insurance Corporation of B.C. said the “sizable and significant loss” is evidence of the growing financial pressures from a rapid increase in the number of collisions in the province, as well as the rising costs of those claims.
“The number of crashes occurring across B.C. is continuing to escalate year-after-year. As a result, the number of claims we are receiving is growing by thousands each year,” the corporation said in a news release on Sunday.
The cost of injury claims is closing in on $3 billion annually, ICBC said.
The number of large loss claims, with an average payout of $450,000, has also spiked by 80% in the last 12 months.
The spike in the number of claims is also causing a slow-down in how quickly settlements are delivered.
“This has particularly been the case with represented claims, which are taking even longer to settle. The longer a claim takes to settle, the more expensive it becomes,” ICBC said.
ICBC said $935 million in net losses have already accumulated between April 1 and Dec. 31 last year, signalling that premiums are not covering payouts.
The insurance provider asked the provincial utilities commission to hike basic and optional rates last fall to combat its financial crisis.
Attorney General David Eby said in September that the rate hikes would mean the average driver can expect an annual increase of 8% or $130 per year on their insurance bill.
Eby has previously said the Crown corporation’s financial problems are the fault of the former Liberal government for failing to address issues years ago.
But Liberal caucus executive director Shane Mills said the previous government implemented strong measures to control costs, including a distracted driving campaign, raising premiums for some high-level vehicles and reducing executive pay.
“As well, a third-party review was conducted on how to tie any rate increases to inflation, and is in the hands of the new government,” Mills said in a statement.
Eby is expected to deliver his response to the latest losses Monday in Vancouver.
Finance Minister Carole James was not available for comment Sunday on how the loss will affect the upcoming provincial budget.
This story was originally published by Canadian Insurance Top Broker.