"Persistence in Bringing Vexatious Litigation Has Significant Consequences"

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.

ICBC Claim Frequency Down – Trend Projected to Continue

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.

Hard Data on ICBC's Legal Costs from 2003-2011

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.

Why Can The Government Scoop ICBC Profits?


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 suf?cient capital levels to protect policyholders from ?nancial risk and provide long-term ?nancial 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.

ICBC Projects $605 Million in Net Income For Upcoming Years

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.

ICBC Responsibility Transferred to the Ministry of Finance


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.

From Trial To Judgement: How Long Does It Take in an ICBC Claim?


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.

The Blunder of No-Fault Insurance


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.

Hard Data About ICBC Bodily Injury Claim Frequency and Severity

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“.



ICBC Proposed Insurance Rate Hike: The Straight Goods on Why Its "Needed"


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.

Contact

If you would like further information or require assistance, please get in touch.

ERIK
MAGRAKEN

Personal Injury Lawyer

When not writing the BC Injury Law Blog, Erik is the managing partner at MacIsaac & Company, based in Victoria, B.C. He is also involved with combative sports regulatory issues and authors the Combat Sports Law Blog.

“Work hard, be kind and enjoy the ride!”
Erik’s Philosophy

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