Eby hopes to reverse ICBC's $1B loss with $5,500 suffering cap, faster dispute process
B.C. Attorney General announces fixes to 'dumpster fire' losses at auto insurer, including cutting pain and suffering payouts by two-thirds and a new claims resolution tribunal.
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A week after he lambasted the B.C. Liberals for leaving his government a "dumpster fire" financial mess at its public auto insurer, Attorney General David Eby said he can reverse massive losses without significantly overhauling the system but by tackling "out-of-control legal costs."
Instead, he said that the Insurance Corporation of B.C. (ICBC)'s $1-billion losses in the current fiscal year can be offset by a few changes. Those include capping payouts for "pain and suffering" from minor injuries to $5,500 — two-thirds below the current average — and streamlining disputes in insurance claims through a new independent tribunal.
"The reforms I'm announcing today are intended to make ICBC financially sustainable," Eby told reporters Tuesday, "… reforms that will rein in out-of-control legal costs."
None of Eby's fixes — which wouldn't kick in until next year — should come as a surprise, said Integrity B.C. executive director Dermod Travis.
"It may not be the end of the fixes required, but he definitely made decisions that won’t come as a surprise to stakeholders," the non-profit government watchdog spokesman said. But while Eby did not explicitly respond to proposals he adopt a "no-fault" insurance model in B.C., which experts have said would dramatically cut costs, Travis said for minor injuries the province effectively has.
"He‘s trying to avoid using the 'no-fault' term," Travis suggested, "but he has in fact introduced a no-fault aspect into the system — because there's a cap in terms of how many damages you can have. This, in reality, is a form of no-fault insurance."
But for those hoping the province would rein in skyrocketing accident costs — and a growing number of collisions every year — by more drastic, systemic measures will have to wait for any deeper moves.
Retired senior civil servant Rick McCandless — whose 35 years in B.C. government included assistant deputy minister and Chief Financial Officer of the Ministry of Attorney General and a senior analyst position on the province's Treasury Board — said Eby's solutions are "what the government should have done" years ago. But he questioned the math behind the $1-billion savings prediction.
"There's some math work that needs to be done," he told Metro. "They say the average minor pain and suffering claim is $16,500. But how many claims are there? They haven't said, but even assuming 40,000 that is a maximum total savings of $440 million. Where's the rest of the billion?"
Nonetheless, McCandless lauded the steps. He and Travis want to see much greater transparency around ICBC's financials, in particular its optional insurance products which are not revealed to private sector competitors or the public.
Others have decried cost caps as unfair to those seriously injured on the roads with lasting impacts.
"ICBC failed to properly assess serious injuries that were initially deemed as 'minor' dating back to 2010," tweeted the Rights Over Arbitrary Decisions (ROAD) for British Columbians coalition, which is lobbying against injury caps on behalf of trial lawyers and injury specialists. "Now British Columbians' rights are at risk as a result.
Caps punish victims."
Travis said that the trial lawyers have a point in worrying about the loss of the right to sue.
"One challenge ICBC faced has been its propensity to prefer to litigate rather than negotiate," he said. "In doing that, it’s left itself exposed to the type of legal claims coming in, and there seems to be a nastiness that developed in approaching injury claims in particular."
But payout caps were an easy target for Eby, since B.C. is the last province to impose maximum compensation for various soft-tissue and suffering injuries. Some have pushed for ICBC to be privatized to increase competition and reduce the public fiscal risk, a proposal that Eby has steadfastly resisted.
Correction (Feb. 7): The estimated savings from cutting payouts on 40,000 minor injury claims by two-thirds would be $440 million, according to Rick McCandless. An earlier version of the story mistakenly quoted his calculation of the payout costs, not total savings.