The Cost to ICBC of Aging Drivers.
The government is lowering the seniors' discount from 25% to 15%, but still requiring other policyholders to pay more to make-up for the lost revenue. What dos this subsidy cost?
At a time when the concept of a public monopoly providing auto insurance is being questioned, one would expect ICBC to retain the public's support by being transparent and accountable. Unfortunately, the opposite appears to be the philosophy adopted by the management at ICBC as evidenced by witholding the forecast injury severities from public view.
This commentary explores three areas where ICBC appears to be providing poor advice, focusing in particular on financial forecasting and an apparent move to reduce transparancey and accountability.
ICBC has refused to publically file certain historic injury claim severities for settled claims. This request seeks an order from the B.C. Utilities Commission to require ICBC to publicly file the information.
This commentary explores how the government receives $70 million annually in driver license fees while ICBC's Basic policyholders must pay the cost as part of their annual insurance. The provincial fee scheme appears contrary to a 1998 Supreme Court of Canada decision respecting fees versus taxes. The government should correct this double payment.
This commentary discusses two recent changes to how ICBC pays for injury claims, and whether these changes will support a lower deficit forecast for fisal year-end. Whether this will be enough to avoid insolvency by 31 March 2019 is the open question. Also included is Ian Mulgrew's report of 18 February 2019; https://vancouversun.com/opinion/columnists/ian-mulgrew-icbc-trial-strategy-slammed
ICBC's third-quarter report showed an operating loss of $890 million and liabilities exceeding assests by $119 million. ICBC is now insolvent. The question is whether the coverage changes will produce sufficient savings to stablize ICBC's finances?
This paper examines ICBC's request to eliminate information on its Optional program's market share in the context of the lack of information on this aspect of its operation.
The paper reviews the SAF Q2 results with the forecasted position of the ICBC Basic program for 2018/19.
The recent 6.3% rate increase filing suggests that the government may be forced to bailout ICBC as the capital reserve is eliminated.
The Manitoba regulator just approved a 1.8% rate increase for complusory auto insurance. Why are the Basic rate increases in Saskatchewan and Manitoba much less than for ICBC?
The government has directed ICBC to fund more traffic enforcement, but its more of a restoration. And why is the government not funding more police traffic enforcement instead of asking over-burdened policyholders to do it?
This paper outlines the insurance plans in Manitoba and Saskatchewan, and the blanket insurance option required by Uber and Lyft.
Commentary on certain aspects of the Ontario government's plans regarding electricity pricing and auto insurance regulation.
A commentary on a paper released by the Fraser Institute on certain aspects of the finances of ICBC.
Driver-based penalties are increasing by 20% today, with another 20% increase planned for 2019. ICBC calls the penalty a premium, which confuses this penalty with the vehicle premium. Confusion is part of the reason for the low public perception of our auto insurer.
Is the new penalty and protection fee an abuse of monopoly power and an attempt to achieve risk pricing perfection?
This paper discusses the fact that the NDP government is using cabinet orders to control ICBC's finances and keep the B.C. Utilities Commission confined. These were the tactics used by the previous government to avoid public oversight.
The government's decision to postpone a general rate increase until April 2019 will reduce ICBC's already low capital reserve by perhaps $150 million in 2018/19.
This paper reviews the key results of the government's public opinion survey on potential changes to ICBC's driver penalties and the design of Basic rates.
My comments on the Fraser Institute's report "The Decline and Fall of ICBC."
My comments on certain aspects for the latest proposals to make Basic insurance rates "fairer." It seems that most of the proposals will result in less generous discounts and greter revenue for ICBC.
The national public sector accounting rules require that ICBC's net income or loss be counted in the government's revenue. The increase in the net loss reduces revenue, but there is no change in the actual cash being transferred (which is nil). This accounting anomoly requires further review.
On 6 February 2018, minister responsible David Eby announced major changes to injury claims process and coverage, with expanded no-fault accident benefits and monetary limits, and a $5,500 cap on pain and suffering claims for "minor" injuries. The government expects that these changes will reduce annual claims costs by approximately $1.0 billion.
My Commentary on how former foance minister de Jong was calling the shots on ICBC's finances. See also http://vancouversun.com/opinion/columnists/vaughn-palmer-blame-game-aimed-at-de-jong-and-the-restless-candidates and http://vancouversun.com/opinion/columnists/vaughn-palmer-liberals-plan-to-delay-the-fix-at-icbc-fails-miserably
The Alberta government has limited the 2017/18 increase in the private vehicle insurance rates to 5%. It stated that the previously allowed 10% maximum increase was not inline with its affordability priority. Background and implications are provided.
The Manitoba regulator recently approved a 2.6% increase in Basic vehicle rates for the coming year. This paper looks at how BC rate increases compare to the publicly-owned no-fault systems in Saskatchewan and Manitoba.
A new ICBC forecast of the Basic program shows major rate hikes are required to keep the capital reserve from being fully depleted within four years.
The Times Colonist editorial correctly blames the Liberal government for allowing ICBC's finances to rapidly deteriorate, and warns of hard choices to come; http://www.timescolonist.com/opinion/editorials/editorial-hard-choices-ahead-for-icbc-1.21569689.
Reprint of my article in today's Tyee; https://thetyee.ca/Opinion/2017/06/16/NDP-Faces-Mess/?utm_source=daily&utm_medium=email&utm_campaign=160617
A generally negative survey of the no-fault auto insurance business in Ontario, by the Globe and Mail; http://www.theglobeandmail.com/report-on-business/rob-magazine/the-real-reason-ontarios-auto-insurance-rates-are-so-high/article34560827/
This Fact Check concludes that ICBC's claim that fraud is costing $600 million annually is significantly exggerated.
This paper reviews Mr. Crombie's comments in a recent interview as reported by Keith Baldrey in the Burnaby News of March 6, 2017.
Minister Stone attempts to defend ICBC's deficit forecasts during Question Period on February 22, 2017.
Gary Mason, of The Globe and Mail, reports on the new financial forecast for ICBC; http://www.theglobeandmail.com/news/british-columbia/provinces-file-bungling-has-driven-insurance-corp-of-bc-into-trouble/article34136030/, with a backgrounder.
ICBC's 3rd Quarter 2016/17 forecast, and the 2017/18 forecast show a worsening financial picture. No relief in the government's 2017/18 budget.
My submission recommends that the BC Utilities Commission set expectations for ICBC's 2017 rate request, and includes data on forecasted rate requirements and comparisons of Basic rate increases with Saskatchewan and Manitoba.
In a January 8, 2017 editorial the Times Colonist says that the government has to reduce the projected increase in Basic rates; http://www.timescolonist.com/opinion/editorials/editorial-find-ways-to-cut-insurance-rates-1.6542717
"A foolish consistency is the hobgoblin of little minds...."; Richard McCandless submits comments and recommendations to the BC Utilities Commission respecting ICBC's 4.9% Basic rate increase for 2016.
This Occasional Paper (No. 18) reviews ICBC claims data from 2012 to 2015 to attempt to identify cost drivers. The outlook for the medium term is as discussed.
Richard McCandless commentary in the Times Colonist about the high capital reserves at ICBC; http://www.timescolonist.com/opinion/letters/why-we-pay-too-much-for-auto-insurance-1.1497
Stephen Hume of The Vancouver Sun provides a fact-based review of how speed increases the chances of serious injury or death; http://vancouversun.com/opinion/columnists/stephen-hume-readers-wont-trade-away-speed-for-lower-insurance-rates
Pete McMartin's (the Vancouver Sun) srticle on the growing cost of the 25% senior discount on Basic insurance; http://vancouversun.com/opinion/columnists/pete-mcmartin-driving-is-getting-old-the-growing-burden-of-seniors-insurance
Adrian Dix asks Auditor General Bellringer to review ICBC finances in light of projected $1.5 billion capital requirement to continue the Basic rate subsidization; http://vancouversun.com/news/local-news/ndp-wants-auditor-general-to-review-icbc-finances
Times Colonist editorial syas politicians should stop using ICBC rates for political advantage; http://www.timescolonist.com/opinion/editorials/editorial-unshackle-icbc-from-politics-1.3341544
My preliminary impressions of ICBC's Basic forecast filed on 23 November 2016.
The Vancouver Sun editorial calls on the government to restore the BC Utilities Commission's authority to regulate ICBC rates, saying that the government's cap on Basic rates has put ICBC in an untenable financial position; http://vancouversun.com/opinion/editorials/editorial-political-interference-hobbles-icbc
Richard McCandless, in The Times Colonist, outlines the looming financial crisis at ICBC; http://www.timescolonist.com/opinion/op-ed/be-prepared-for-icbc-rate-increase-shock-1.3101218
My submision to the BC Utilities Commission on ICBC's 2014 rate request, including a history of the capital reserve and government directives; http://www.bcuc.com/Documents/Arguments/2015/DOC_43293_03-12-2015_McCandless_Final-Argument.pdf
My survey of ICBC's 2015 rate request and recommendations to the BC Utilities Commission; http://www.bcuc.com/Documents/Arguments/2016/DOC_45935_03-14-2016_McCandless_Final-Argument.pdf
How the government relies on ICBC's Optional insurance to generate excess profits. 3 June 2014.
Comments on the August 2012 review of ICBC by the government's Internal Audit and Advisory Services. 21 August 2012. The report https://www2.gov.bc.ca/assets/gov/british-columbians-our-governments/services-policies-for-government/internal-corporate-services/internal-audits/icbc-review.pdf