The rise of recent crash claims and injury payouts have depleted ICBC's cash reserves below the province's standard prompting the province to exempt the company from the rules in order to allow reforms. Attorney General David Eby said he eased the cash reserve regulations to allow ICBC to apply to the BC utilities Commission for a rate increase it is already collecting, and possibly additional further increases later. "The rule in BC is that ICBC has to have 100 per cent match between the amount of money they have in the bank and the claims they are aware of," Eby told reporters. "ICBC doesn't have that. They have about 54 cents in the bank for every dollar of claim that they're aware of. So we had to change the rule in order to appear in front of the utilities commission to lay out the changes that we're doing with ICBC to get it back on track financially."
The province announced earlier this month that in order to cut costs, there will be a $5500 limit on payouts for pain and suffering claims which would take effect in April 2019. Eby further intends to present legislation this spring to limit minor injury payouts but will also double the maximum benefit for serious injury claims from $150,000 to $300,000. In 2013, ICBC had $1.45 in the bank for every dollar of claims but the situation has drastically collapsed due to an 80 percent increase in injury claim costs in the past seven years.
A low capital ratio increases the risk that in a catastrophic loss scenario, like a massive flood or other natural disaster, ICBC would not be able to cover its existing liabilities. Eby said the currently provincial government is not injecting any money into ICBC to help keep it afloat. He didn't rule out the possibility of a bailout in the future. "Ultimately, the government in the backstop for ICBC's losses," he said. "We are taking every single step that we can to prevent that from happening." The car insurance company is expected to continue to operate in the red for the next few years before returning to solvency. "It's obviously a very serious issue that didn't happen overnight," he said. "We are rushing to get ICBC back to solvency."