Vaughn Palmer: B.C. Liberals warned years ago about ICBC 'dumpster fire', but only fanned the flames
Credit to Author: Hugh Dawson| Date: Sat, 08 Feb 2020 03:04:33 +0000
VICTORIA — As the B.C. Liberals went into the last election, they knew very well that the Insurance Corporation of B.C. was headed for a financial crackup.
The alarm bells had been ringing for several years, building to an all-bad-news report about the upward pressures on rates, delivered to the cabinet near the end of 2014.
The report called for “bold moves” to rein in the payouts for minor soft-tissue injuries, punitive premiums for those who indulged in distracted driving and other high-risk practices.
It also documented how the crisis had been compounded by the Liberal government’s practice of siphoning hundreds of millions of dollars out of the ICBC accounts to sweeten the province’s financial statements.
The Liberals were not amused by the reminder of their recklessness with the ICBC accounts, nor by what they regarded as advice to move to a “lite” version of no-fault insurance.
Before passing along the report to ICBC for action, the cabinet stripped out seven pages containing some of the most contentious recommendations.
The cabinet decision to strip out the most effective recommendations left ICBC with remedies that fell well short of addressing the problem. Consequently, the upward pressure on rates continued.
There matters stood until mid-November 2016 when the B.C. Utilities Commission, in the course of reviewing an ICBC rate application, ordered the corporation to provide an outlook on potential rate increases over the next few years.
Under protest that the numbers could be “taken out of context” and used for political purposes, ICBC nevertheless obliged. That was how ratepayers learned that they could be facing increases of up to 42 per cent over five years.
The outcry was such that the Liberals could no longer ignore the mess of their own making. But with an election coming, neither did they want to face up to the strong measures needed to bend downward the rate curve.
So in early 2017, they resorted to a brazen political dodge. They commissioned a review from Ernst and Young, the same accounting firm that produced the report the Liberals had gutted in late 2014.
“The objective is to obtain recommendations following a comprehensive examination of all key cost drivers impacting the affordability and sustainability of basic insurance rates, and potential mitigation strategies,” the government release read in part.
Which is not to suggest that the Liberals expected the firm to come back with a dramatically different set of findings and mitigation strategies than the ones they had rejected two years earlier.
The fine print of the contract suggested they only really cared about one thing: “The consultant will deliver a preliminary report to the ICBC board not later than June 30, 2017.”
The deadline was almost two months after the scheduled date for that year’s provincial election.
By the time the consultant would report back with the latest instalment of bad news, the B.C. Liberals expected to be safely ensconced in their next term with a fresh mandate and four years to tackle the mess at ICBC.
But the Liberals outsmarted themselves. For on June 29, Premier Christy Clark, having lost her legislative majority and a confidence vote in the legislature, was engaged in a desperate and futile effort to save the Liberal hold on power.
Clark met with Lt.-Gov. Judith Guichon and urged her to dissolve the legislature and clear the way for another election. Guichon rejected the advice and instead called on John Horgan to form government.
So it was that the Ernst and Young report, with its projections of billion-dollar losses and looming rate increases at ICBC, fell into the hands of Horgan and the New Democrats.
Payback time. For 16 years the Liberals had lashed the New Democrats for their record in “the dismal decade of the 1990s.” Now the NDP had documented proof of Liberal recklessness, incompetence and cover-up.
Thus was born the legend of the “dumpster fire,” which continued to play out this week, as the New Democrats announced they were moving the province to full-blown no-fault auto insurance.
The shift is not without potential controversies, witness the NDP’s attempt to persuade the media to refer to it as “auto plan care enhancements” (ACE) instead of the hated term “no-fault.”
Still, there was no overlooking the desperation of the Opposition Liberals this week as they scrambled to adjust to the changing landscape around auto insurance.
No longer did it make sense to complain about out-of-control premiums, with the New Democrats freezing rates this year and promising a 20-per-cent cut next year.
Nor was there much to be gained from trying to drum up public sympathy for the trial lawyers, although Liberal leader Andrew Wilkinson said at one point that he was “not at all concerned about being on the side of the lawyers.”
The Liberals repeated calls for ICBC to be subjected to greater competition, never mind that they promised that the last time they were in Opposition and changed their minds when they got into government.
But for the most part, they complained that ICBC can’t be trusted, remains in a financial mess, and does a poor job of serving its customers. Which is true enough, so long as one overlooks how the Liberals started it all during their time in office.
In that respect, they could be compared to the arsonist who started a dumpster fire, then complained that his hands were blistered by the flames.