ICBC has been a political football since Day 1

Attorney-General David Eby is setting the table for some significant changes at the Insurance Corporation of B.C. It is important to remember that ICBC has been a highly-political Crown corporation, used by all political parties for their own purposes, since it took over the car insurance market in 1974.

The Insurance Corporation of B.C. (ICBC) is in crisis. ICBC is set to lose $1.3 billion in the current fiscal year, and once again it is the subject of intense political gamesmanship.

On Monday, Attorney General David Eby called a press conference to officially confirm the deficit. He pledged a number of measures to try and ease the bleeding. At the same time, he said the former BC Liberal government left ICBC as a “blazing dumpster fire” by ignoring its problems, and even changing an independent report commissioned in 2014 which examined ICBC’s financial issues.

“They knew the dumpster was on fire, but they pushed it behind the building instead of trying to put the fire out,” he said.

It is important to put a whole series of events in chronological order to get a good understanding of why the press conference was called on Monday.

Last week, Vancouver Sun reporter Rob Shaw wrote a story about a report commissioned by the BC Liberal government in 2014. Consultants Ernst and Young were asked to take a detailed look at ICBC’s financial woes and operations. A draft report was delivered on Dec. 23, 2014. Afterwards, some seven pages of more controversial recommendations were stripped out of the final report, before it was passed on to ICBC a few months later.

Upon release of The Sun story, then-finance minister Mike de Jong (currently one of six candidates for the BC Liberal leadership) admitted that the final report was altered, largely because its recommendations could have paved the way for no-fault insurance. By the way, B.C. is the only province in Canada without no-fault insurance, which means it is open season for lawyers to go after the corporation for large awards for their clients. B.C. drivers also pay the highest premiums in the country.

“There’s no point in presenting it as an option in any kind of final recommendations because government can tell you now we are not prepared to go to a no-fault regime,” de Jong said last week.

Todd Stone, then-minister of transportation (and another BC Liberal leadership candidate) said he did not remember the draft report, even though his ministry (along with de Jong’s) had commissioned it. After doing more double-checking, he said he never saw the initial recommendations from Ernst and Young – only the version of the report which had already been altered.

This was on Friday. Somewhere around this time, a copy of a financial update to the ICBC board, which had met earlier in the week, was leaked to Vancouver Province columnist Mike Smyth. Of course, its conclusion that ICBC would report a $1.3 billion deficit was a sensation, and The Province played it up for all it was worth on Sunday’s front page. ICBC took the highly unusual step of confirming the report, in a very rare press release issued on a Sunday. It was also announced Sunday that Eby would hold a press conference on Monday to address the issue.

By the way, the ICBC board is now chaired by former NDP cabinet minister and party leader Joy MacPhail.

All of this happened as the BC Liberal party members prepare to select their new leader later this week, and as trial lawyers in B.C. are in the midst of an intense campaign against any limits on injury settlements and any form of no-fault insurance.

Is it just a coincidence that this ICBC bombshell came out in this way, at this time? You be the judge. What I do know is that Eby is a very smart individual who is extremely good at generating headlines, going back to his days with the Pivot Legal Society. If he can start to set the table for ICBC changes and rate increases and at the same time sew chaos among his political opponents, why wouldn’t he do so?

ICBC has been a political football since it was first created by the first NDP government in B.C., under premier Dave Barrett. I remember the 1972 campaign in which Barrett was elected premier very well. I was a young driver and too young to vote, but the thought of lower insurance rates for young drivers appealed to me. I also recall seeing campaign signs for NDP candidate Bill Hartley in the Yale-Lillooet riding, saying the NDP would bring in “licence plate car insurance” (similar to systems in Manitoba and Saskatchewan, also brought in by NDP governments).

We young drivers did get lower rates when ICBC first came into existence in 1974. Those rates didn't last long. They were more than doubled in 1976, just after the Social Credit party under Bill Bennett defeated the Barrett government in the December, 1975 election. Pat McGeer was named minister responsible for ICBC, and almost immediately stated (just like Eby) that the corporation was a financial basket case. The government almost immediately made insurance policy holders pay.
At that time, all insurance policies expired at the end of February and, in my case, I didn’t have enough money set aside to pay the premiums, even though I was working full-time and making decent wages. There was no monthly payment plan at the time, although ICBC did bring one in because many other people were in the same boat I was in.

ICBC has since been used for all kinds of political purposes by subsequent Social Credit, NDP and BC Liberal governments. None of them have had the political fortitude to bring in no-fault insurance, or to even consider full competition. There is now competition for the optional portion of the car insurance market. I have used private insurance companies for many years for optional insurance and highly recommend them. If you are a safe driver with few or no claims (in my case, my only at-fault crash occurred in 1973, the year before ICBC started in business), you should be able to save money.

The BC Liberals knew that ICBC was in deep financial trouble, but as de Jong said, were not willing to even consider no-fault insurance. Instead, they took more than $1 billion in dividends from ICBC over the term of the last government so they could balance the provincial budget. ICBC policy holders paid more for insurance to allow the BC Liberals to meet their political goal. This move also robbed ICBC of much-needed capital and helped pave the way for this massive deficit.

Eby is clearly going to bring in some controversial measures to try to deal with the deficit, including capping personal injury payments for less-severe mundane injuries such as soft tissue injuries. There has been a tremendous amount of fraud in this area, largely because it is hard to prove there are or are not such injuries, and what the extent of any injuries are. Any limits brought in make sense to me.
However, also made it clear Monday that he will not consider no-fault insurance or privatization – or even permit full competition with private insurance companies. That inevitably will mean higher premiums for drivers. A much higher fee to get or renew a driver's licence is also a possibility. A one-time payment by the government to eliminate the ICBC deficit this year would be meaningless - it would be back in the same shape next year without significant changes to the way it does business.

In short, ICBC will continue to be a political football for many years to come. All of us who drive vehicles in B.C. will almost certainly pay higher premiums and other taxes, to allow the political circus to continue. Premier John Horgan's pledge to reduce the costs paid by ordinary hard-working people may go up in smoke, thanks to the ICBC debacle.