In the first six months of its fiscal year, ICBC has posted a net loss of $582 million, which it says is reflective of the continued pressure it is under from the rising number and cost of claims.
The public auto insurer said its net claims incurred for the first six months of its fiscal year alone topped $3 billion, which is an increase of $634 million, or 26% over the same period last year ($2.4 billion).
This comes after ICBC reported a net loss of $1.3 billion for its 2017/18 fiscal year, and means ICBC is now projecting to report a year-end financial net loss of $890 million for 2018/19.
The ICBC said there are “no signs” that the “ongoing and increasing” claims cost pressures it is experiencing will abate without the major reforms to auto insurance in BC.
“We are looking for ways to accelerate and add to our efforts to solve the financial problems at ICBC,” said BC Attorney General David Eby.
Eby has previously referred to ICBC’s financial situation as a “dumpster fire.”
In a statement, ICBC said that while its current financial pressures are clearly serious, “they have been caused by an auto insurance system which has long been in need of substantial modernization – something that is now, at last, happening.”
That modernization it said, includes changes that will shift the focus away from maximizing payouts to a care-based system, which makes caring for those injured in a crash the top priority, with less money spent on legal costs.
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Government and ICBC are also modernizing ICBC’s 30-year-old insurance system to ensure all drivers pay premiums which more accurately reflect the risk they represent on the road.
“For too long, financial problems at ICBC were ignored and hidden from the public,” said Eby. “Unfortunately, ICBC’s second-quarter results for 2018-19 show that its financial position remains serious.”
Since March 2017, the dollar value of settlements demanded by plaintiff lawyers for litigated files increased by 27%. The average cost of closed litigated injury claims for the first six months of ICBC’s fiscal year rose from $100,427 in 2017 to $121,686 in 2018, a 21% increase.
“Given this situation, we are looking for ways to accelerate and add to our efforts to solve the financial problems at ICBC,” said Eby. “As a result of these changes, ICBC is projecting net savings of $1 billion annually.”
However, he noted, “we won’t start seeing these savings until after most of the reforms take effect, starting April 1, 2019, after which we can expect more dramatic financial improvement.”
Eby said the provincial government will continue to monitor ICBC’s financial situation and “we are taking steps toward making BC’s auto insurance system work for people again.”