Insurance Corp. of B.C. faces uncertain future
It’s no secret that the Insurance Corp. of British Columbia (ICBC) is under financial distress. But should it be saved?
In 2016-17, it suffered its largest loss ever – $889 million, an amount equal to 18 per cent of its total premiums. What’s worse, it’s heading for an even larger $1.3 billion loss this year, which would represent 23 per cent of its premium revenue. Why has this happened?
ICBC is a hybrid of an auto insurer and an instrument of government policy. It operates driver licensing and testing, and undertakes road safety programs. It also offers discounts to seniors and the disabled, together with insurance premiums that can’t reflect either the age or gender of the drivers it insures. Even with these added duties, ICBC managed to cover its costs for many years by raising rates, since it has a monopoly on mandatory coverage.
So what’s changed to cause the large losses?