ICBC Law

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.

Today the BC Government announced that they will be disbanding the Ministries of Attorney General and Solicitor General and replacing them with a single “Justice Ministry“.

ICBC came under the jurisdiction of the Ministry of Solicitor General which was headed by Shirley Bond.  With this recent shake-up ICBC is being moved to the watch of the Finance Ministry.  This move now puts Kevin Falcon, pictured above, in charge of ICBC.

For more on this move you can click here to read the Times Colonist’s reporting.  Also worth reviewing is the Governments Green Paper on “Modernizing BC’s Justice System” which has just been released.

Unless you work in the civil justice system or have recently accessed the Courts to resolve a civil dispute it may come as a surprise to learn that usually a verdict is not rendered by a trial judge until some time after the close of the case.  So how long does it take?  Other than giving the unsatisfactory answer of “it varies” I’ve never had any concrete data to point to in addressing this question until now.

The latest issue of the Trial Lawyer’s Association of BC’s magazine ”the Verdict” (Issue # 130) sheds some light on this topic with hard data.

Two BC lawyers (Thomas Harding and Derek Miura) spent some time analyzing information obtained from ICBC through Freedom of Information requests.  With this information in hand they authored an article addressing the commonly held belief that judge alone trials are less costly and time consuming than trial by jury.  Interestingly their study concludes that the opposite of this appears to be true when factoring in the time and cost associated with reserved reasons for judgement.

Their statistical analysis shows how long it takes judgement to be delivered after the average Judge alone ICBC trial in BC Supreme Court.  The answer is a ratio of 29 days for every day of hearing.  In other words, on average a one day trial would have judgement pronounced 29 days after trial.  A 5 day trial would take 5 times longer (145 days) and the average 10 day trial would take 290 days for judgement.

In addition to shedding light on this topic, the recent installment of the Verdict is worth reviewing in full for its in-depth analysis of the current state of the law relating to civil jury trials in BC.  It is available free on-line for TLABC members and can be subscribed to by the public at large for a fee.

One of the foundations of our tort-system is accountability.  Those harmed at the hands of others careless or criminal actions deserve compensation.  Those who act carelessly and cause harm ought to be held accountable by providing the compensation.  This goes to our basic understandings of fairness.

When governments decide to strip people of their right to sue and instead create no-fault systems of compensation accountability is removed from the picture.  This can lead to absurd results as demonstrated in a story published last week by the Globe and Mail.

Accountability matters.  At its most basic level no-fault insurance takes away compensation rights of victims and redistributes these to those that cause harm.  Examples such as the one pointed out by the Globe and Mail should act as a reminder to Government that removing accountability from the Civil Justice System is a fundamentally flawed policy.

The BC Utilities Commission recently posted a number of documents which were filed in support of ICBC’s request for a modest insurance premium increase.  These are worth reviewing in full for information relating to ICBC’s fiscal health.  From a public perspective the good news is that ICBC operates profitably.

ICBC stresses “changes in investment income” as one of the main reasons behind the rate increase request.  As previously discussed, while their investment income is down, if the government didn’t scoop ICBC’s revenues when their investment income was high a rate increase would not even be contemplated at this time.  When your profits are taken from you its hard to save for a rainy day.

The other point stressed by ICBC relates to rising bodily injury claims.  Specifically ICBC’s Manager of Regulatory Affairs says “the main  change from past  years  being  higher  claims frequency“.  With this in mind perhaps the most interesting data in the documents are the hard statistics relating to the severity and frequency of bodily injury claims.  I reproduce some of the key charts below.

Its worth noting in analyzing the data from 1996-present there is an overall trend of bodily injury claims declining in frequency.  Specifically, Weekly Benefit Claims are down in frequency and have modestly increased in severity. Personal Medical Rehab Claims are down in frequency and steady in severity.  Personal Death Benefit payments are down in frequency and steady in severity and finally Personal Bodily Injury Claims continue to be down in frequency with a modest increase in severity.

I welcome this information being publicly available so British Columbians know that hard data supports BC’s full tort system as being financially viable.  We are fortunate to live in a Province where an informed public is not fooled into giving up their legal compensation rights and ability to access justice due to a perceived auto insurance “crisis“.

Earlier this week ICBC released their 3rd Quarter financial results with an accompanying press release stating that they will be seeking a modest increase in basic insurance coverage rates to counteract the consequences of “rising bodily injury costs and falling investment income“.

ICBC is looking at an annual rate increase of about $30.  Yesterday ICBC’s CEO wrote an Open Letter To Customers stating that “Today, however, we are facing new pressures. Like other companies and individuals, the challenging world financial markets are negatively affecting us. While our investment returns continue to perform well against the markets, our investment income has dropped by $38 million compared to last year. Our best estimate is that our investment income at year-end will be $90 million less than in 2010.”

While it is true that ICBC’s investment income is down and claims  payouts fluctuate year to year, those reasons don’t explain why a rate hike is needed.  Historically ICBC is well managed and profitable, I’ve discussed this in the past.  They have generated hundreds of millions in net revenues year over year with the current premiums in place.   ICBC did what any financially responsible insurer does with such profits and built up substantial reserves to act as a safety net for leaner times.  The reserves were so significant that the Government decided to scoop 3/4 of a billion dollars from ICBC’s coffers.

With current rates ICBC can weather the storm of market volatility and the ups and downs of claims payouts year over year.  All this with net revenues significant enough to get the company through leaner years.  The Government is short on funds, they scooped money from ICBC and that is why motorists are faced with rate increases.

Below is a brief article which was first published yesterday at Slaw.ca, one of Canada’s best read and most recognized legal blogs.  For your convenience I republish the article here in its entirety.  If you find this topic of interest I suggest you visit the original article and weigh in on the comments that follow.

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I’ve written many times that the phrase tort ‘reform‘ is often used in association with efforts to strip the rights of injury claimants.  Reform, however, is a neutral concept in and of itself.  Reform simply means change and the change could be for better or worse.  With this in mind  I’d like to share a tort reform idea for the better which recently crossed my mind.  In short the idea is to add a pool of liquidity to rectify the injustice of dry judgement.

The thought crossed my mind as I was reading reasons for judgement released this week by the BC Supreme Court, New Westminster Registry.  In this week’s case (Saether v. Irvine) the Plaintiff was injured when the Defendant battered him.  The consequences were “profound and catastrophic” causing a brain injury that “severely compromised (the plaintiff) in virtually all facets of his life“.  Damages of $1,075,000 were assessed to cover the Plaintiff’s anticipated future care costs alone.  Given the fact that this case involves an intentional tort it is a safe bet that this judgement will be uninsured and likely (at least partially) dry.

Reading this reminded me of a 2005 case (Chow v. Hiscock) where the Court expressly recognized the injustice of dry judgement facing a plaintiff left “in a permanent semi-vegatative state” following a “brutal, unprovoked assault“.  The Plaintiff’s future care costs were anticipated to exceed $4,000,000.  Madam Justice Koensberg made the following comments hoping the Plaintiff would some day be able to receive some of these funds from the uninsured defendants:

[40]           Can I say that this is still a case where punitive damages should be awarded?  If I were to award punitive damages, it would be purely symbolic.  I have heard nothing which indicates that the magnitude of this award or even some small part of it is likely to be payable by any of these three young men.  One can hope that they find a straight path to earn a significant amount of money or that one even wins the lottery, so that the earnings could be available to increase Mr. Johnson’s quality of life.

The law recognizes that those harmed through the fault of others are entitled to reasonable compensation.  When it comes to negligently caused harm defendants are often insured and plaintiffs can collect their judgements.

In cases where Defendants hold inadequate insurance examples can be found where legislatures have intervened to ensure victims can collect on their judgments.  For example, in BC, Section 20 of the Insurance (Vehicle) Act provides a pool of $200,000 of available compensation from ICBC for damages caused by uninsured motorists.  A further example is the requirement for BC motorists to purchase a minimum of one million dollars of under-insured motorist protection coverage.

When plaintiffs suffer harm through intentional torts, however, there often is no insurance to protect the wrongdoer or compensate the victim.  This is an unfair reality in Canadian law.  Victims harmed through assault, battery, sexual molestation and other intentional acts are often faced with dry judgments.  When they seek legal advice they are often turned away being told that litigation may not be worth the effort unless the Defendant has deep pockets

There is no justification I can think of making it fair for a car crash victim to be able to collect their judgement from a pool of money created by the government when the victims of crime are left with dry judgments.

The financial well being of a defendant has no bearing on a victim’s right to damages.  If the government has seen fit to create a pool of funds for victims of motor vehicle collisions to collect from surely a similar system can be created to allow victims of intentional torts facing dry judgments.  This is a rough idea.  Thoughts and feedback are welcome from lawyers and non-lawyers alike.

On October 28, 2011, Coquitlam Now published an article by Neil Mohinrda, the director of the Centre for Financial Policy Studies at the Fraser Institute.  The article was titled “Maintaining ICBC a disservice to BC drivers“.

In short Mr. Mohinrda discussed the perceived virtues of private insurance while criticizing the perceived short-comings of public insurance.  While I’m never opposed to a private/public auto insurance debate, or to scrutiny of auto insurance premiums, what the one-sided article is sorely missing is a discussion of what people get for their money in different Canadian Jurisdictions.

I’ve addressed this topic before.  A meaningful discussion of insurance rates simply can’t be had without looking at the product.  Furthermore the private insurance industry is quick to call for the stripping of victim rights in order to have a functioning system.  BC’s experience demonstrates this is far from necessary.

I was glad to see that Mr. Mohindra’s article was quickly called out for its short-comings.  You can click here to read the criticism raised by Kellee Irwin, ICBC’s Vice President of Personal Insurance who correctly points out that

Mr. Mohindra’s column mentions Alberta on a couple of occasions. While you may be able to get a cheaper insurance premium there, they fail to point out that our customers’ medical and rehab benefits are three times more than those offered in Alberta, New Brunswick and Ontario. In comparison to our $150,000 in medical and rehab coverage in B.C., those three provinces offer $50,000 while Nova Scotia provides $25,000.

If we’re making comparisons between provinces, which we agree is difficult to do, it should also be noted that drivers in Alberta, New Brunswick and Nova Scotia are limited in what payments they can receive. Those provinces have systems that are variously based on caps or deductibles on pain and suffering awards. This is not the case in B.C., where drivers are entitled to take the at-fault party to court for damages

For more analysis you can click here for a good overview from a BC lawyer who previously practiced in a private insurance jurisdiction and shares some observations of the private insurance industry.

Nova Scotia appears to be taking a step in the right direction to undo the harm caused by previously implemented tort ‘reform’ measures.

By way of background, Nova Scotia stripped the right of people injured in their Province to be properly compensated for soft tissue injuries caused by motor vehicle collisions.  The Province placed an artificial “minor injury cap” on these types of claims.  The cap was ultimately upheld as constitutional.

Just because something can be done, however, does not mean it should be.  After years of reduced compensation rights to the benefit of insurance company profits Nova Scotia realized that stripping accident injury victims of their rights was a poor move.

With this background in mind I was pleased to read a headline that Nova Scotia may be preparing to (at least partially) bring back tort rights for soft tissue injuries.  Canadian Underwriter reported the following on October 24, 2011:

An optional tort product appears likely to be offered in Nova Scotia in the future, according to Ken Meyers, former chair of the Insurance Brokers Association of Nova Scotia (IBANS).

“It appears clear now that there will be an optional tort product introduced,” he said at the 91st Annual Convention of the Insurance Brokers Association of Ontario (IBAO) in Toronto on Oct. 19.
The proposal for an optional tort product is contained in The Final Report Addressing: The Nova Scotia Automobile Insurance Review, published in May 2011.

By purchasing this option, an insured would not be subject to the $7,500 cap currently in place in Nova Scotia for soft tissue injuries.

“In the automobile insurance reforms of 2003 undertaken in Nova Scotia, some stakeholders felt that removal of the right to sue for pain and suffering had the impact of unfairly limiting their options and choice,” the report says in its analysis of the issue.

“Enabling consumers to purchase a full tort option would serve to restore that choice factor, the importance of which is a strongly held view of some consumers.

The article then goes further and states that “Recognizing that this ‘choice’ will inevitably carry a higher premium, it will be important that the product is priced so that there is no likelihood that it will be cross-subsidized by the non-tort product“.

This is where my positive reaction ends.  It is not necessary and wrong to require an individual to pay in order to access their tort rights.   As previously discussed, stripping injury victim rights is not necessary to have a profitable auto insurance system.  Suggestions to the contrary should be closely scrutinized by the press and public alike.  For the time being, however, I commend Nova Scotia for this small step in the right direction.

On Sunday, September 25, 2011 two public awareness events will be held to bring attention to the need for wrongful death law reform in British Columbia.

The Events are scheduled at 2:00 pm in Vancouver at the backsteps of the Vancouver Art Gallery and at the same time at 1850 Shannon Lake Road in West Kelowna.  You can click here for more details.

I’ve written about the need for wrongful death law reform before.  If you are in Kelowna or Vancouver this weekend and would like to learn about the shortcomings of BC’s wrongful death laws and steps that can be taken to positively change this area of the law I encourage you to attend these important public awareness events.