A new provincial auto insurance price comparison estimate showing B.C. drivers paying the highest rates is highly simplistic, as demonstrated in my Commentary. Correspondence with Aaron Sutherland of the ISB is also included. Related item;https://pressprogress.ca/bc-news-outlets-exaggerated-the-cost-of-public-car-insurance-their-numbers-came-from-a-big-insurance-lobbyist/
In the August edition of The Broker magazine Chuck Byrne, the exectutive director of the Insurance Brokers Association, wrote an editorial in support of the public model for the provision of compulsory insurance. Exerpts of this editorial are attached.
A new report shows significant increases in the cost of auto insurance in Alberta and Ontario. This seems to contridict the claims that competition results in lower prices.
This paper provides highlights of B.C. Hydro's 2018/19 annual report. The finances are now based on public sector GAAP and reflect the one-time loss caused by the windup of the revenue deferral account.
Occasional Paper No. 69 reviews the highlights of ICBC's 2018/19 annual report and suggests areas for further review.
Auditor General Carol Bellringer has accepted the government's pledge to fully restore the B.C. Utilities Commission's authority to regulate B.C. Hydro and removed that part of her qualification on the government's 2018/19 financial statements.
The MPI is on solid financial footing and seeks to stregthen the Basic capital reserve. It is seeking a minimal Basic rte increase for 2020. The no-faulth auto insurance model in Manitoba is compared to the scheme in BC.
Despite the clear opinion of the province's auditor general to the contrary B.C. Hydro asserts that the B.C. Utilities Commission is independent. This paper looks at the issue.
Occasional Paper No. 68 attempts to provide a single source of key service measure data at the program level for the last four or five years. This is to compensate for the dearth of such information provided by ICBC.
Both Manitoba and B.C. public power utilities are facing major cost increases as large capital projects near completion. The Manitoba regulator is raising prices to smooth the transition, but the B.C. government has chosen to keep the rate increase below the increase in B.C. Hydro's costs. The NDP approach has many parallels to that of the previous government.
This Commentary attempts to answer the question as to what percentage of BC drivers carry additional third-party liability insurance greater than the $200,000 limit in the compulsory Basic program. ICBC does not make public its Optional sales.
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.
The Newfoundland and Labrador public utilities board recently released its report on auto insurance in that province. In 2017 reports commissioned by the governments of Ontario and British Columbia were released. The three reports are attached.
B.C. Hydro has generated or contracted for power in excess of domestic sales for a number of years, and forecasts surpluses for a number of years to come. This Commentary reviews the acquisition and sales.
This Commentary reviews the recent report by the special committee of the Ontario legislature on financial transparency. The committee was struck to examine how the previous Liberal government ignored public sector accounting standards to lower electricity rates while still claiming to balance the 2017/18 budget.
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.
On 20 March 2019 the Insurance Bureau of Canada (IBC) released a report that compared auto insurance rates in B.C. and Alberta. It argued that the price difference was the result of competition;http://assets.ibc.ca/Documents/Auto%20Insurance/BC-Auto/Comparison-of-Auto-Insurance-in-BC-and-Alberta.pdf. ICBC issued a statement; https://www.icbc.com/about-icbc/newsroom/Pages/2019-mar19.aspx. See also https://vancouversun.com/news/politics/b-c-drivers-pay-more-than-albertans-for-same-auto-insurance-report.
Occasional Paper No. 67 reviews B.C. Hydro's new three-year financial plan and the F20 to F21 rate request filed with the B.C. Utilities Commission. The government has loosened the constraints on the independence of the regulator, but is it sufficient to satisfy the requirements of the public sector accounting standards?
Occasional Paper No. 66 reviews aspects of ICBC's latest 3-year financial forecast, and suggests that the claims costs for 2019/20 are overstated. The absence of the assumptions used to develop the forecasts makes any detailed analysis impossible. Also discussed is the accounting treatment of the net income of ICBC and B.C. Hydro.
This commentary reviews the new five-year rates plan for B.C. Hydro, as well as the government's plan to restore the B.C. Utilities Commission's authority to regulate the public utility.
On 13 February 2019 the government released a comprehensive review of the purchase of private electricity by B.C. Hydro https://www2.gov.bc.ca/assets/gov/farming-natural-resources-and-industry/electricity-alternative-energy/electricity/bc-hydro-review/bch19-158-ipp_report_february_11_2019.pdf. The review concluded that a) BC Hydro bought too much energy and energy with the wrong profile, b) BC Hydro paid too much for the energy it bought, and c) BC Hydro undertook these actions at the direction of Government.
See also https://vancouversun.com/news/politics/b-c-hydros-private-power-projects-wasting-billions-says-new-report and
https://vancouversun.com/opinion/columnists/vaughn-palmer-ratepayers-zapped-by-hydro-report-that-reveals-shocking-interference and the response of Clean Enery BC https://www.cleanenergybc.org/reports-publications/response-to-davidsons-report
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
In early February Auditor General Bellringer released her report "Rate-Regulated Accounting at B.C. Hydro" (http://www.bcauditor.com/sites/default/files/publications/reports/OAGBC_RRA_RPT.pdf, which provides more explaination for her decision to qualify the government's financial statements for the last two years; see https://vancouversun.com/news/politics/political-directives-have-undermined-b-c-hydros-finances-auditor-general-says. On 7 February 2019 Vaughn Palmer commented on some of the implications at https://vancouversun.com/opinion/columnists/vaughn-palmer-hydros-deferrals-problem-about-to-become-a-political-problem.
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 BC Utilities Commission's process for reviewing ICBC's Basic rate requests is not designed to link to the fiscal year, not to multi-year forecasts. This should be reformed to provide an early warning system for the future.
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.
This paper reviews the testimoney of former Ontario Premier Wynne at the legislative committee on transparency, and compares the practice in Ontario to that practiced in B.C.
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?
My comments on the results and the lack of discussion on accounting changes or future rate increases.
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?
The inclusion of the net income of BC Hydro and the net loss of ICBC complicates the forecast of the surplus.
On Friday the government released ICBC's second quarter excuse for a quarterly report, and a unsubstantiated forecast of a $890 million loss for the current fiscal year. Occasional Paper 64 reviews the numbers and suggests that the year-end forecast may be optimistic.
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.
A committee of the Ontario legislature is holding hearings into how the previous Liberal government attempted to ignore the accounting rules to make the government books appear than was the case. What lessons might the B.C. government learn from this review?
In 2016 BC Studies published my article on how the Liberal government manipulated the finances of BC Hydro to keep the annual profits and dividends high while suppressing the increase in electricity rates: https://ojs.library.ubc.ca/index.php/bcstudies/article/view/187787/186354
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?
The attached paper provides background for two reports on deferral accounts and B.C. Hydro's finances that are expected to be released shortly. The government has promised to fix the finances at our public utilitity, but the details on how this will be accomplished is unclear.
This paper explores the options available to the senior official committee appointed to develop recommendations for a new rates plan for B.C. Hydro. Will the committee adopt the new approach of restoring integrity to financial management, or continue with the old practice of abusing the deferral accounts?
The Ontario government has moved to clean-up certain accounting practices, including the financing of the "Fair Hydro" deferrals. The accounting adjustment of the electricity deferrals increased 2018/19 expenditures by $2,4 billion.
A public inquiry is now underway designed to examin the approval process for the $12.7 billion hydroelectric dam. As Konrad Yakabuski writes: "Whether it involves provincially-owned hydroelectric behemoths in British Columbia, Manitoba or Quebec, or the Crown-owned nuclear-dominated Ontario Power Generation, politically-driven energy policies across Canada have saddled ratepayers and taxpayers with billions of dollars in extra debt."https://www.theglobeandmail.com/opinion/muskrat-falls-inquiry-wont-save-newfoundlanders-from-a-127-billion-sinkhole/article37052291/https://www.theglobeandmail.com/canada/article-inquiry-into-muskrat-falls-megaproject-boondoggle-to-begin-in-2/
Occasional Paper 61 reviews certain aspects of BC Hydro's operations and finances for the last five yers.
This commentary paper explores in more detail some of the issues involved in fixing the accounting policies at B.C. Hydro.
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.
This paper provides an overview of why the government set aside $950 million for the 2017/18 fiscal year to begin to fix the financial troubles at B.C. Hydro. the restoration of proper accounting standards at the public power utility presents certain financial problems for the government.
The just released 2017/18 annual report shows a combined Basic and Optional operating loss of $1.3 billion, and the capital reserves are now dangerously below the safety margins. Occasional Paper No. 60 reviews some of the key indicators.
Some of the key media reporting and comments on the changes to the Basic rate design announced on August 9, 2018.
The new Basic premium model targets younger drivers, and at-fault drivers to give a financial benefit to older drivers. More comments are included in Occasional Paper No. 59.
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.
A short commentary on the regulator's 18 July 2018 approval of the purchase of Teck's interest in the Waneta Dam.
This paper reviews the positive 2017/18 annual reports of the public auto insurers in Saskatchewan and Manitoba for both the compulsory Basic and the optional programs. This contrasts with ICBC's forecasted combined loss of $1.4 billion.
Expensive electricity was a major issue in the recent Ontario election. The new government succeeded in forcing the board and CEO Mayo Schmidt to resign, but lower prices have only been possible by transferring cost to taxpayers and future generations; https://www.theglobeandmail.com/canada/article-entire-ontario-hydro-one-board-to-resign-ceo-to-step-down/ and https://www.theglobeandmail.com/opinion/article-doug-ford-kneecaps-hydro-one/ and https://www.cbc.ca/news/canada/toronto/doug-ford-hydro-one-1.4743097 and https://www.theglobeandmail.com/business/article-doug-ford-used-legislative-threat-to-oust-hydro-one-ceo-board/
This paper examins ICBC's main accountability reports in light of the accountability model adopted by government in the early 2000's. The level of public accountability is poor, and the government should require ICBC to make significant improvements.
A comment on minister Mungall's statement and the staff review of BC Hydro's costs.
My article published by The Tyee online journal; https://thetyee.ca/Analysis/2018/06/07/ICBC-Changes-Insurer-Woes/?utm_source=daily&utm_medium=email&utm_campaign=070618
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.
Barrie McKenna in the Globe and Mail political meddling for causing the high price of electricity in Ontario; https://www.theglobeandmail.com/business/commentary/article-blame-political-meddling-not-ceo-pay-for-ontarios-dysfunctional/
The three main politic parties in Ontario are promising to reduce electricity prices, but are being vague as to what this will cost. It's time for the voters to become educated consumers.
A comment in response to Vaughn Palmer's article about the BC Investment Management Corporation and the well-funded public pension plans.
McClearn's article in the Globe and Mail provides a useful summary of many of the issues involved in the accounting dispute between the ontario auditor general and the government. Similar issues exist in British Columbia.
Between 2010 and 2015 the provincial government appropriated almost $1.2 billion of Optional policyholders' capital. Now -- with the province's finances healthy and the ICBC capital reserves almost eliminated -- would seem an appropriat time to return the funds. Occasional Paper No. 56 estimates the Basic and Optional capital shortfalls to 2021/22.
My comments on the Fraser Institute's report "The Decline and Fall of ICBC."
The recent announcement of an increase in the fare subsidy for seniors on the BC Ferries prompted me to review an earlier estimate on the cost of the 25% seniors' subsidy at ICBC's Basic insurance. If the government funded the sudsidy it would relieve some of the pressure on Basic rates.
This 'Commentary' paper reviews the Ontario and BC public accounts committee discussion of the oppositin by the two auditors general of the application of reguatory accounting, and the impact to the governments' financial statements.
Occasional Paper No. 54 looks at the current design for pricing risk and some of the changes being suggested in the current public consultation.
Auditor General Carol Bellringer issued a report, http://www.bcauditor.com/sites/default/files/publications/reports/FINAL_BCUC.pdf, that reminds the government that five key recommendations of the 2014 independent task force remain outstanding. In August Ms. Bellringer qualified the government's 2016/17 financial statements, in part because BC Hydro's deferral accounts were not overseen by an independent regulator. The Canadian Press provided a limited summary (http://vancouversun.com/pmn/news-pmn/canada-news-pmn/b-c-auditor-offers-advice-on-utilities-commission-after-previous-studies/wcm/c65203d2-1811-4418-ab5b-f55f3002d5d7. DeSmog Canada's report was more comprehensive; https://www.desmog.ca/2018/03/15/auditor-general-nudges-b-c-amend-act-exempted-site-c-dam-independent-review
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.
Rob Shaw of the Vancouver Sun summarizes the Utilities Commission's decision http://vancouversun.com/news/politics/b-c-utilities-commission-rejects-b-c-hydro-rate-freeze; Les Leyne of the Tmes Colonist comments http://www.timescolonist.com/opinion/columnists/les-leyne-ndp-s-hydro-rate-freeze-thaws-in-a-hurry-1.23192381. My comments are also attached.
ICBC's 2017/18 to 2020/21 financial forecast shows the combined capital reserve falling to dangerously low levels. However many inconsistencies make the forecast suspect. Also included is Acting CEO Nicolas Jimenez's email of March 15th, my reply of March 19th and his reply of March 28th.
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.
This paper suggests that injury claimants received only 57% of the $2.0 billion paid by ICBC in 2015 for no-fault accident benefits and injury claims. The balance was absorbed in 'transaction' costs.
This paper discusses the auto injury claim models in the states of New South Wales and Victoria, and in New Zealand, with possible lessons for BC.
On 28 January 2018 (a Sunday!) ICBC posted its third-quarteroperating results for 2017/18. The loss of $935 million, with a forecast of near $1.3 billion by year-end sparked a series of media reports; http://theprovince.com/news/bc-politics/mike-smyth-shocking-massive-losses-revealed-at-icbc-huge-rate-hikes-feared,
http://vancouversun.com/opinion/columnists/vaughn-palmer-eby-suggests-major-reforms-to-clean-inherited-icbc-mess, https://www.theglobeandmail.com/news/british-columbia/ag-david-eby-vows-reform-to-icbc-to-avoid-massive-rate-hikes/article37784040/, https://www.theglobeandmail.com/news/british-columbia/government-changes-to-tackle-deficit-not-enough-icbc-chair/article37800884/, https://www.theglobeandmail.com/news/british-columbia/icbcs-financial-woes-blamed-on-christy-clark-era-rate-smoothing/article37813885/http://vancouversun.com/news/national/ian-mulgrew-dont-blame-us-and-dont-believe-icbc-lawyers-insist
http://www.timescolonist.com/opinion/columnists/les-leyne-eby-pulls-alarm-on-icbc-s-dumpster-fire-1.23158279, http://vancouversun.com/opinion/columnists/vaughn-palmer-a-liberal-timeline-that-would-make-the-sopranos-envious, http://vancouversun.com/news/local-news/repair-shops-argue-used-parts-are-piece-in-fixing-icbc-finances,
http://theprovince.com/opinion/columnists/mike-smyth-are-auto-body-repair-shops-over-billing-icbc
In this article, published by the Tyee, I advocate the creation of a Financial Accountability Office as an independent officer of the legislture, modelled on the Ontario agency: https://thetyee.ca/Opinion/2018/01/30/One-Step-Plan-Boost-BC-Accountability/?utm_source=daily&utm_medium=email&utm_campaign=300118
My Commentary on how former fiance 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
Brady Yauch of the Consumer Policy Institute discribes how electricity pricing in Ontario is now determined by politics rather than economics. BC Hydro rates have been set by political decisions since 2012 when the governemt ordered the regulator to approve lower than required rates. https://cpi.probeinternational.org/2017/11/09/its-the-end-of-energy-regulation-in-ontario-as-we-know-it/
BC Auditor General Carol Bellringer is preparing to become BC Hydro's external auditor, which will put more pressure on the government to allow BC Hydro to conform to national public sector accounting standards. See Les Leyne http://www.timescolonist.com/opinion/columnists/les-leyne-watching-b-c-hydro-is-a-growth-industry-1.23137605 and Vaughn Palmer http://vancouversun.com/opinion/columnists/vaughn-palmer-bellringer-anxious-to-plug-into-b-c-hydros-accounts
ICBC recently posted its second quarter 'Statement of Operations,' which is highly deficient as a quarterly report from such an important Crown corporation. Occasiona Paer No. 50 compares the results with Saskatchewan's compulsory insurance program in an attempt to understand the reasons for the continuing losses.
The government should lower the minimum capital targets to reduce the current and forecasted capital deficiency, Given the nature of the Basic monopoly, and the near monopoly enjoyed by the Optional program, the targets should be lower, thereby reducing the pressure on future rates.
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.
This paper provides a high-level review of how ICBC's costs out-stripped revenues from 2012 to 2016/17, and focusses in bodily injury claims costs.
The paper suggests that capping pain and suffering claims for minor soft tissue injury claims will not generate sufficient savings to treturn ICBC's finances and capital reerves to a satidfactory condition.
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.
The government is planning changes to ICBC's insurance model to reduce costs. Occasional Paper No. 47 discusses areas where the government should re-imburse ICBC policyholders for current programs or policies that benefit the taxpayer.
On 30 November 2017, Rob Shaw of the Vancouver Sun reported that the government is actively considering a cap on claims for pain and suffering awards for minor soft tissue injuries; http://vancouversun.com/news/politics/government-considers-cap-on-minor-injury-claims-to-fix-icbc-finances The cap would be a key part of a strategy to prevent the massive losses forecast for the compulsory Basic insurance program as discussed in http://www.bcpolicyperspectives.com/media/attachments/view/doc/commentary_icbc_s_28_nov_2017_basic_forecast_29_nov_2017/pdf
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 current government's plan to freeze BC Hydro rates is the latest example of how governments have succumbed to the alure of short-term gain by manipulating BC Hydro's finances. Occasional Paper No. 46 traces the key events since 2011.
Can the BCUC approve BC Hydro's request to withdraw the 3% rate increase for 1 April 2018? I argue that it should not approve the request; includes final submission of 11 January 2018.
As a follow-up to Occasional Paper No. 45, this paper looks more deeply at the question of affordability in the pricing of BC Hydro's electricity.
Andrew MacLeod of The Tyee reports that Finance Minister Carole James intends to fix BC Hydro's accounting practices, but it will take time; https://thetyee.ca/News/2017/10/25/Fixing-BC-Hydro-Accounting/?utm_source=daily&utm_medium=email&utm_campaign=251017
This paper discusses some aspects of the new plan to freeze BC Hydro rates for 2018.
Resource economist Robert McCullough's testimonoy before the Site C panel on October 14th http://www.sitecinquiry.com/wp-content/uploads/2017/10/00614_TTP-2_2017_10_14_Vancouver_TP-Transcripts-V14.pdf pg. 1562 to 1581; opinion piece in the Vancouver Sun of October 30th http://vancouversun.com/opinion/op-ed/opinion-site-c-proponents-fall-prey-to-sunk-costs-fallacy
The Auditor General has added a new reason to qualify her opinion of the government's 2016/17 financial statements; the fact that the 'prescribed' accounting standards do not conform to the public sector accounting standards. Read more in Occasional Paper No. 44.