ICBC is a wreck

British Columbia's once-celebrated public auto insurer has become a financial train wreck, its critics say as studies into the beleaguered Crown corporation call for dramatic rate hikes and drastic structural changes to save it from ruin.

But while everyone appears to agree the system is broken, there is disagreement over how the Insurance Corporation of British Columbia went off the rails in the first place and what must be done to fix it.

The crisis at ICBC is shaping up to be the first major financial hurdle for B.C.'s new NDP government.

Attorney General David Eby, who is also the minister responsible for ICBC, blames the previous Liberal government for problems at the corporation.

"ICBC, as described to me by senior bureaucrats, is on the path to insolvency," Eby said. "It's very unfortunate that it's been left for so long, because I think there was really an opportunity to address this much earlier."

Eby and other ICBC supporters single out the actions of former Liberal premier Gordon Campbell as marking the beginning of the corporation's troubles.

Campbell required ICBC to keep much higher amounts of backup capital. The resulting stockpile proved irresistible to politicians in 2010 following the global financial meltdown, critics say, when the government began siphoning hundreds of millions of dollars of "excess capital" almost every year.

In all, the Liberals withdrew $1.2 billion from the lucrative optional side of ICBC's business, and also transferred $1.4 billion to offset deficits on the compulsory side providing basic coverage beginning in 2012.

"The reason we're in a bind right now is that there's no more money left in the optional piggy bank," said retired civil servant Rick McCandless, who has written extensively on ICBC.

"The music has stopped. You can't play the game anymore. Somebody has to make some hard decisions. And that somebody is government."

Liberal member of the legislature John Yap said the New Democrats are playing politics in trying to lay blame for the problems at ICBC, which he largely attributed to the increasing number of collisions and claims year-over-year along with rising repair costs.

The Liberals' priority was to keep rates low and stable while improving the operations and finances of the corporation through a number of measures, including foregoing the dividends from the optional side of the business as of last year and rolling in a new information technology system that would save the corporation millions, he said.

"Government did take action," Yap said.

A recent report from Ernst & Young painted a dire picture at the Crown corporation, concluding that rates must increase by 30 per cent by 2019 to cover costs. A separate forecast released last November by ICBC indicated rates would need to increase by 42 per cent over the next five years to make up for expenses.