The impacts of the COVID-19 pandemic on British Columbia’s public insurance provider ICBC are significant and could result in $1 billion of losses for the upcoming fiscal year, according to Attorney General David Eby.
In a joint press conference on Friday morning, Eby and ICBC CEO Nicolas Jimenez outlined the impacts of the pandemic on a few key aspects of the crown corporation’s functions, stating that the public health emergency has had both a positive and negative effect thus far.
On the up side, with fewer drivers on the roads between mid-March and May 2, there were fewer crashes and, as a result, fewer vehicle damage and personal injury claims opened by ICBC.
This has resulted in savings of $158 million as accident claims dropped by 46 per cent, but claim numbers have already started to increase again as more vehicles hit the road after the pandemic curve flattened in B.C.
Future statistics on crashes and claims will depend on consumer behaviour going into the new normal of the pandemic, as it remains to be seen how many people work from home and their attitudes towards public transit, among other trends.
The bad news for ICBC is that over 150,000 customers have changed their insurance policies in the wake of the COVID-19 pandemic.
This includes 103,000 people who cancelled their insurance altogether and 57,561 customers who downgraded their rate class resulting in a projected $283 million decline in written insurance premiums.
“This number is expected to improve as people get back behind the wheel,” said Eby. “Whether ICBC will return to projected insurance premium revenue this year is still an open question.”
ICBC is also expected to take a hit to their investment portfolio, as some decrease in its value has already been seen for the 2019-2020 fiscal year which ended two weeks after the public health emergency was declared in B.C.
The impact of those two weeks on the previous fiscal year is in the hundreds of millions of dollars, and those figures will be released in the summer, according to the company’s CEO Nicolas Jimenez.
According to the crown corporation, early indications suggest the impact to their bottom line could be upwards of $1 billion as financial markets take an unprecedented nose dive.
The numerical value of the impact will be determined based on the length and scope of the global market downturn, and the bottom line will not be known until the end of the 2020-21 fiscal year.
However the crown corporation continues to waive some fees and support customers in changing their plans as the pandemic unfolds.
“ICBC waiving cancellation and re-plating fees alone during the pandemic has saved customers around $5 million, and we will continue to work with those drivers facing financial hardship,” said Jimenez in a statement.
“And given these uncertain times, we have a responsibility to consider many factors when making long-term decisions that could adversely affect ICBC’s bottom line — and customers’ insurance premiums — in the future.”
The crown corporation has no savings or safety net to fall back on, a fact that that Eby blames on the previous Liberal government and their “mismanagement”.
But the province promises that if ICBC sees a surplus net income, it will be used to benefit taxpayers in B.C.
“There are more than 10 months to go in the fiscal year and many unknowns, but if ICBC’s bottom line ends up better than expected, any surplus will be used to benefit B.C. drivers,” said Eby.
Decisions on the use of surplus net income will be made next year when it is more clear whether there will be any additional income to begin with.
Options to pass down surpluses to drivers include rebuilding the financial capital health of ICBC to reduce longer-term pressure on rates, providing a one-time direct relief to customers, or a combination of both.
Jimenez says the crown corporation does not expect things to stabilize in the near future, concluding that it is too early to tell what the overall financial impact of the pandemic could be for ICBC.