ICBC has posted a net loss of $860 million for the first three quarters of their fiscal year, according to a statement made by the insurance company on Thursday.
The corporation’s deficit is $273 million higher than they initially projected, and the company estimates they’ll lose $1.18 billion for the entire 2018-19 fiscal year.
ICBC says that an increase in the cost of claims — particularly litigated injury claims — is one of the main reasons why the deficit has grown. In the first three quarters of this fiscal year (April 1st – December 1st 2018), net claims cost the insurance company close to $5 billion, an increase of roughly $600 million over the same period last year.
“ICBC’s ongoing financial net losses continue to be driven by increased claims settlement costs which are much higher than anticipated, and aggressive pressure from plaintiff counsel which is leading to higher settlement demands and slower claims closure rates,” said the crown corporation in a release.
According to BC’s Attorney General, David Eby, personal injury claims have increased by 43% in the last five year, but he is aware that this not the only cause of the company’s deficit.
“Losses of this magnitude are unsustainable and unacceptable” he said in a statement.
Once the new fiscal year begins on April 1st, changes will come to many ICBC systems.
A new dispute resolution process has been developed to streamline court processes, hopefully cutting back on litigation costs and case durations. Meanwhile a new limit on pain and suffering payouts for minor injury claims will be implemented.
The Attorney General notes that while litigation is costing more, plaintiff lawyers are not to blame for the increase.
“They are operating according to the rules of a system that has devolved over years of mismanagement by the previous government,” he said.
These two revised systems are projected to save ICBC approximately $1 billion per year.
Eby concluded his statement on ICBC’s quarterly report by promising that improvements would come to British Columbians’ only auto-insurance provider.
“While the reforms coming [on] April 1st are projected to save ICBC more than $1 billion per year, the corporation’s third quarter results make it clear we need to do even more — and do it fast,” he said.
“In the coming days, we will have more details on how the government intends to respond to escalating legal administration expenses. I am confident we can accelerate the improvement in ICBC’s financial situation, while striking the appropriate balance between reducing legal costs and preserving the ability of injured people to advocate for and obtain settlements that meet their needs.”