ICBC will be running an $833 million dollar deficit by the end of this year, according to budget documents.
The new numbers are a far cry from the government's earlier projection,the corporation would generate a $678 million surplus over three years.
Opposition leader John Horgan did not mince words in question period Wednesday when he called the corporation's financial situation a "$1.5 billion blunder."
The provincially-run universal auto insurance provider has been a source of government revenue in previous years, but there has often been political conflict over rate increases and quality of services.
Richard McCandless, a former deputy minister and author of an ICBC historical review, said there are three things which soured the outlook for ICBC over the past few years.
The first, he said, was a rapid increase in claims costs, both the total number and the average cost of each claim. Second, low interest rates have lowered ICBC's investment income.
"The third thing — which is fairly unique here — is this government policy of suppressing the basic rate increase each year," he explained.
"They've been doing that since 2010. That's really hurt the revenues, so the revenues can't balance their cost increases and they run a deficit."
McCandless said the political strategy of keeping rates low and taking out dividends from the corporation has backfired, as ICBC is quickly running out of capital reserves.
He says there's a massive structural deficit in the basic coverage rates, and he said it would take at least a 20 per cent rate increase to cover that structural deficit.
"The government has to get out of the business of price controls," he said. "You've got to let the revenues go back up, but perhaps not immediately by 20 per cent as that would be rate shock."
Ministry, ICBC taking steps to keep rates down
For now, the government has ordered ICBC to increase rates by 4.9 per cent next year.
Transportation Minister Todd Stone defended the way his government had managed the Crown corporation and pointed out an independent review of the public insurer.
"This is why we directed the ICBC board to commission an independent third party review to look at all facets of ICBC to make sure they are employing every initiative to drive costs down."
ICBC said it is also taking steps to reduce pressure on rates by stopping fraudulent claims, doubling premiums on luxury vehicles and shrinking its executive team.
To listen to the interview, click on the link labelled ICBC's fiscal crash: expert explains how the once money-making venture ended up in the red