ICBC Law

Last year I had the pleasure of being interviewed by the Georgia Straight with respect to ICBC’s obligation to fund massage therapy under their Part 7 Benefits plan.  This week I had a further interview with reporter Carlito Pablo addressing the BC Government’s Bill 52 which seeks to overhaul BC’s traffic ticketing dispute system.  You can view his article here.

For those of you visiting this site looking for further information on this topic you can click here to read my previous article where I share my concerns of the Government proposal which strips your right to a meaningful hearing when disputing a traffic violation “notice” and the increased insurance premiums that can accompany conviction.

For those of you visiting this site after reading Mr. Mulgrew’s article published in today’s Vancvouer Sun, welcome.

If you are looking for more information on my comments on Bills 44, 52 and the BC Government’s Justice Reform Initiative you can find my previous articles here and here and here.

Cynicism is an undesirable lens to view matters through but sometimes it is appropriate.  Unfortunately, some of the recent Bills introduced this week in the BC Legislature make it very difficult to view BC’s Justice Reform Initiative in any other way.

You may recall earlier this year the Government made a bold presentation highlighting perceived shortcomings in BC’s Justice System.  The Government announced that a Justice Review would be undertaken to “identify actions that government, the judiciary, the legal profession, police and others can take to give British Columbians more timely and effective justice services“

The Government appointed Mr. Cowper to head this review and he was tasked to “report to government as he develops recommendations around engagement of key institutions and stakeholders. Government will provide periodic updates in response to his recommendations and he will make his final report to government by July 2012.”

It is now early May.  We are two months away from Mr. Cowper’s “final report“.  Despite this, the Government has introduced two Bills which have passed second reading seeking to drastically overhaul BC’s civil justice and traffic court system.  Specifically I’m referring to Bill 52 and 44.   I discussed these here and here.

If the Review’s final recommendations are not in yet how can laws seeking massive overhaul to BC’s civil and regulatory justice system be introduced?  If these Bills pass Third Reading in the Spring Session, it appears the Justice Review is mere political theatre.  If not, and the Government actually takes Mr. Cowper’s findings into consideration before passing these laws, then I will admit to being too quick in playing the cynicism card.

Remember the political fallout several months back when ICBC proposed to increase insurance premiums based on a single driving violation?  The Government called ICBC’s proposal “unfair” and “not appropriate”.  Something must have changed since then because the Government has now introduced a Bill to give ICBC the power to levy “additional premiums” that ICBC considers appropriate based on driving point penalties.

In the whirlwind of new Government legislation recently introduced, Bill 52 received second reading this week.  This legislation seeks to drastically overhaul BC’s motor vehicle offense ticketing dispute system by taking these matters away from our Courts and instead creating administrative tribunals to process disputes.

In addition to the above, the Bill seeks to amend Section 34 of the Insurance (Vehicle) Act as follows:

13 Section 34 (1.1) is amended

(a) by adding the following paragraphs:

(d.1) adopt or establish a driver assessment point system classifying drivers according to the number, nature and kind of contraventions of driving enactments under the Motor Vehicle Act;

(d.2) in respect of a driver assessment point system adopted or established in accordance with paragraph (d.1), adopting or establishing a method by which point penalties may be converted or compared to driver assessment points for the purposes of assessing and levying basic or additional premiums under the plan against drivers at the times and under the terms and conditions the corporation considers appropriate; , and

(b) by repealing paragraph (e) and substituting the following:

(e) according to any system of classifying drivers adopted under paragraph (c), a point penalty system adopted or established under paragraph (d) or a driver assessment point system adopted or established under paragraph (d.1), assess and levy basic or additional premiums under the plan against drivers at the times and under the terms and conditions the corporation considers appropriate.

In short, this law will give ICBC the power to increase premiums  ”under the terms and conditions (ICBC) considers appropriate“.  This legislation leaves no checks and balances to ensure that what the Government recently called unfair does not become the law of the land.

While the Bill’s goal of freeing up police and judicial resources is worthwhile, the devil’s in the details.  As a practical matter this is what the Bill will accomplish:

1.  If a “driving enforcement officer” (ie - a police officer) doesn’t like your driving you receive a “driving notice” (ie - a ticket)

2.  You lose your right to judicial challenge, instead you are now called a “disputant” and must place your challenge with a newly minted “Driving Notice Review Board“.  Of note, you won’t have the right to cross-examine your accuser at your “resolution conference“.

3.  If/when you lose your dispute before the Board you are issued a “monetary penalty“

4.  If you cant afford to pay the penalty ICBC can refuse to issue you a licence

5.  Last but not least ICBC will issue you “point penalties” and you will then pay higher insurance premiums based on whatever system ICBC develops.

This overhaul will likely bring constitutional scrutiny since the Canadian Charter of Rights and Freedoms is No Trifling Matter.  As MLA Sather quipped on the floor on the Legislature this week “I wasn’t aware that ICBC had that kind of power”.

As previously noted, BC’s Government and Judiciary are involved in a public row with the Government accusing the Courts of being inefficient and the Judiciary responding with complaints of underfunding.  Additionally these two branches of Government are involved in litigation with the BC Court of Appeal recently upholding an order forcing the Government to produce otherwise confidential Cabinet submissions in a salary dispute with the BC Provincial Court.

Enter Bill 44.  This legislation, which just passed first reading, seeks to create “Civil Resolution Tribunals” which will run side by side with BC Courts.  Their jurisdiction is anticipated to be ever-expanding by simple Order in Council with the ability of the Government to include anything that “could be dealt with by a Claim in Provincial Court under the Small Claims Act”.

Perhaps the most troubling aspect of this scheme is set out in Section 20 which holds that, except in very limited circumstances, parties must “represent themselves“.  It does not take much imagination to understand that stripping people of the right to a lawyer provides a great advantage to institutional litigants.

The Government sets out that this legislation is designed to create “accessible, speedy, economical, informal, and flexible” dispute resolution.  Although these goals are laudable, on scrutiny the Government does not appear to put its money where its mouth is with Section 9 specifically exempting claims against the Government from the jurisdiction of these tribunals.

As Vaughn Palmer points out, this Bill is included in a “loaded up” legislative agenda making full scrutiny difficult with limited time.  Legislation taking disputes away from the judiciary and further stripping people of the right to representation deserves public scrutiny.  I imagine BC’s Provincial Court judges will have strong opinions on the matter as well.  Whether these are voiced remains to be seen.

One myth I like to dispel is the idea that there are too many frivilous lawsuits in Court or that the system is not equipped to deal with such claims when they do arise.

Special interest groups push stories of ‘lawsuit abuse’ arguing that change is necessary.  The truth, however, is that frivolous lawsuits can and do get weeded out of Court.  As previously discussed, BC Courts have very effective tools for eliminating bad lawsuits the most powerful of which is a “vexatious litigant” order.

In short a vexatious litigant order can strip a person of their right to sue without first getting judicial approval.  Reasons for judgement were released recently by the BC Supreme Court, New Westminster Registry, making such an order. The reasons are here and are worth reviewing in full to gain insight into the consequences of such an order and the circumstances when one could be made.

Have you ever heard the insurance industry discussing how claims are out of control and without ‘reform‘ coverage will become unsustainable?  In BC we are fortunate that this type of rhetoric has never been accepted.

In some other Provinces, however, such soundbites have caused governments to strip or modify individuals right to sue when harmed through the carelessness of others.  In BC this is not the case.  Given this claims must out of control, right?  The short answer is absolutely not.

The latest data filed by ICBC with the BC Utilities Commission shows that not only are the number of claims down but the Ultimate Claim Frequency (the number of actual claims also factoring in the number of auto insurance policies) is also significantly down.

But this data only covers 2001-2010, surely things will get worse in the future right?  Absolutely not.  The below ICBC claims frequency projections are quite revealing.

This data illustrates that the public does not need to have their tort rights stripped in order to have a stable and functioning auto insurance industry.  Provinces that have fallen for tort-reform rhetoric should have a sober look to BC’s positive experience.

As previously discussed, one of the benefits of having a crown corporation as our Provincial auto-insurer is the accountability that comes with public reporting obligations.

In support of ICBC’s recent request for a rate increase with the BC Utilities Commission ICBC filed thousands of pages of further data earlier this week.  ICBC’s latest filing can be found here.

Included in the filing was data relating to ICBC’s legal costs from 2003-2011.   On review it is apparent that many of these costs have remained steady over time while some expenses have decreased dramatically.  I highlight this information as it runs against the notion advanced by so-called ‘tort-reformers‘ that litigation costs are ever increasing or somehow out of control.  To the contrary, this data reveals a fairly steady and reliable system in action.

I recently reviewed ICBC’s 2012-2014 Service Plan which reported that “Pursuant to legislative change effective April 2010, ICBC now transfers its excess Optional capital to the Government of British Columbia on an annual basis“.

This had me wonder how the Government scoops and plans to continue to scoop ICBC’s profits while ICBC simultaneously applies for a rate hike.  I’m not talking about why this is politically acceptable, but rather the much more basic question of how legally they can do this.  What “legislative change” was made in April 2010?

After a bit of digging around I came across the BC Budget Measures Implementation Act which amended section 26 of the Insurance Corporation Act to read as follows to give the Government power over ICBC’s profits:

(2) Subject to subsection (3) and despite any other enactment, the Lieutenant Governor in Council may, by order, direct the corporation to make payments to the government at such times, in such amounts or circumstances, on such bases and in such manners as the Lieutenant Governor in Council may order and to record the required payments as liabilities in the corporation’s financial statements.

From ICBC’s recently released Service Plan it appears that the Government is choosing to exercise this right on an annual basis.

So why does this matter?    ICBC, like any other viable company, needs to maintain financial stability.  As ICBC reports, the Minimum Capital Test (MCT) “is used to determine whether a company has sufficient capital levels to protect policyholders from financial risk and provide long-term financial stability.”  Scooping profit on an annual basis weakens ICBC’s financial position as they themselves report on page 21 of their Service Plan stating that ICBC’s MCT is lower due to “the transfer of excess Optional capital to the government“.

Actions have consequences.  In this case the action of taking profit from an insurer year over year weakens their financial position.  This reality is worth keeping in mind if ever faced with the rhetoric that individuals should compromise their civil access to justice rights to have a working auto insurance system.

Included in the BC Government’s Budget released today was ICBC’s Service Plan for 2012-2014.  At the conclusion of this document ICBC released their income forecast for 2012-2014.  ICBC projects a total of $605 Million Net Income over the next three years:

This is so despite ICBC’s “transfer of excess Optional capital to the government” and the fact that “investment income is forecast to be lower than historical results“.

Projections like this are a good reminder for the rest of Canada that a full tort system can operate, profitably at that, and consumers should not be scared into being stripped of their right to sue when harmed through the carelessness of others due to a perceived “insurance crisis” or other tort reform rhetoric.

In fact, the BC system is so profitable for ICBC that not only has the Government raided ICBC’s coffers for hundreds of millions of dollars in recent years, the Governments current budget specifically looks to the Insurer for contribution to general revenue with plans on taking $146 Million from ICBC in 2012.