Analysis

Dumpster drivers: enough blame for everyone in ICBC's financial crisis

Is it time we faced our driving problem head on?

Will ruling out no-fault insurance prevent clear-eyed assessment of billion dollar issue?

Collision rates are rising at the same time that insurance company payouts are skyrocketing across North America. All this has contributed to ICBC's financial woes. (Jon Hernandez/CBC)

Most of us are in denial about our abilities behind the wheel.

We don't speed — except when we're in a hurry. We're always courteous — but others are so angry. And of course, we never use a cellphone — except, except, except ...

So how surprised should we be that our public insurer's financial picture has transformed from modest debt to billion-dollar "dumpster fire" as Attorney General David Eby put it Monday?

Eby excoriated the previous Liberal government for hiding recommendations that might have stemmed the financial blood loss because they were politically unpalatable.

But surely drivers also have some blame to take for creating the catastrophic conditions underlying the wound.

'Making up for lost time'

Insurers North America-wide have been scratching their heads over spiking collision rates, rising payouts and the dangers of the distracted driving we claim everyone else is guilty of.

The facts are indisputable: even as technology is supposed to make our roads safer, we're having more accidents than ever. And we're paying more to settle them.

B.C. Attorney General David Eby has vowed to bring ICBC's costs under control. But he has ruled out a move to no-fault insurance. (Mike McArthur/CBC)

"This trend has picked up steam in recent years as the global economies have synchronized and resulted in lower unemployment rates, more disposable income for people in many countries including the U.S. and Canada," says Robert Hartwig, director of the Risk and Uncertainty Management Center at the University of South Carolina's Darla Moore School of Business.

"And what this literally means is they're spending more time in their cars and they're driving more. And so they're being involved in not only more accidents ... but they seem to be making up for lost time for the accidents they weren't involved in during the recession and the global financial crisis."

'They're going to have to face it'

Hartwig and two colleagues produced a paper examining the issue in 2016 for the U.S. industry-based Insurance Information Institute.

Their statistics came from jurisdictions where models of insurance delivery vary widely; but no matter what the system, the problem is the same: more collisions, bigger awards, rising rates.

Hartwig says British Columbia is no different.

"They're going to have to face it," he says. "There's no question economies in places like Vancouver are extremely strong and are likely to stay extremely strong for some time. That means more cars, more vehicles and more accidents. That's part of the downside of that."

Accidents due to distracted driving have risen steeply in recent years, adding to costs for insurers.

Not surprisingly, distracted driving has emerged as a leading cause of accidents in B.C. as it has across North America.

In response, the Liberals increased penalties but refused to take the advice of safety advocates who said the only permanent solution would be removing devices now standard in new vehicles: GPS, Wi-Fi, TV screens and hands-free technology.

While he committed to "long-term fixes to get the system under control," Eby is not likely to ban those devices altogether either. He plans to force bad drivers to pay more while cutting rates for better drivers.

Eby also suggested caps may be coming on payouts for minor injuries which would help unclog the courts, where ICBC is one of the province's most prolific litigants.

But he vowed British Columbians will not see a switch to no-fault insurance.

Under no-fault insurance, it doesn't matter who is found to be at fault; the insurance company will handle the claim and payout for damages, avoiding costly litigation. Blame will still be assigned and that person may experience a potential rate increase upon renewal. 

'An open and honest discussion'

But Rick McCandless believes precluding no-fault insurance is a mistake. A former deputy minister who has examined ICBC extensively, McCandless says ICBC's financial woes are too deep to be saved by anything other than radical change.

"Given the financial crisis that ICBC is facing, what the minister has suggested so far is underwhelming," says McCandless.

"We need an open and honest discussion. And Eby is precluding that."

ICBC is on track to post a $1.3 billion loss, as opposed to the $11 million the previous Liberal government had forecast. (David Horemans/CBC)

Part of the equation is undoubtedly the increased costs of repairing vehicles which have become like computers on wheels. And an accompanying societal shift that sees us more likely to go to court for the kind of minor fender benders that left the beaters of yore looking like dented old sardine cans. 

There's a joke in Saskatchewan, where drivers are given the choice between no-fault insurance and the kind of tort insurance that has resulted in ICBC files clogging B.C.'s courts.

McCandless says 98 per cent of drivers chose no-fault. The two per cent tort fans being the province's lawyers and their families.

Hartwig says insurance rates have been rising across North America at rates of about eight per cent a year.

In attacking his predecessors on Monday, Eby said drastic action is needed to prevent a $400 rate hike for British Columbians. But he doesn't plan on going there.

Which means B.C.'s in-denial drivers may avoid yet another collision — with reality.

About the Author

Jason Proctor

@proctor_jason

Jason Proctor is a reporter in British Columbia for CBC News and has covered the B.C. courts and mental health issues in the justice system extensively.

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