New ICBC scheme will discriminate against many people
As a consulting economist, I provide reports to the courts at the request of British Columbians as well as at the request of ICBC. At Discovery Economic Consulting, we take great pride in providing triers of fact with necessary evidence to assist them in making accurate awards that compensate collision victims fairly. Our reports are, by rule, nonadversarial.
The current state of affairs
ICBC claims that the cost of claims has risen by 43 percent in five years. However, a significant portion of this increase has been as a result of inflation, changes to the prescribed discount rate, and an increase in the number of claims:
- the period from 2013 to 2018 saw inflation of about 8.5 percent;
- additionally, in 2014, there was an amendment made to the prescribed discount rates used to calculate the present value of future losses to more accurately reflect the current market rates. This change was made in the interest of fairness. For a 30-year-old individual, the changes to the discount rate could easily increase the value of their award by 20 percent or more;
- and although we cannot be sure of whether the per-claim cost has changed, the number of claims reported has increased: from 917,000 in 2013 to 1,021,000 reported claims in 2018/2019 (an increase of 14 percent) and the number of ICBC reported crashes has increased: from 265,000 in 2013 to 315,000 in 2018 (an increase of 19 percent).
These three factors, taken together, appear to account for the increase in the cost of claims, and therefore suggest that it is unlikely that there has been an increase in the real cost per claim. That is, on average, claims are settling for the same amount as they have settled for in the past.
Any attempt to hide the real cost of driving to society, whether by artificially lowering the value of victims’ claims or by other means is to do a disservice to all British Columbians.
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