Committee of Supply

Proceedings in Section A

ESTIMATES: MINISTRY OF
ATTORNEY GENERAL

(continued)

On Vote 15: ministry operations, $524,557,000 (continued).

The Chair: Good afternoon, everyone.

I want to acknowledge that I am participating today from the homeland of the Lək̓ʷəŋin̓əŋ-speaking peoples, today known as the Songhees and Esquimalt nations. We extend our appreciation to them for the opportunity to undertake the work before us on this land.

We are meeting today to continue consideration of the estimates of the Ministry of the Attorney General.

Member for Richmond-Queensborough, are you going to be the main speaker?

J. Johal: Yes, I will, for the next half hour.

The Chair: Okay. I’ll just keep track of that.

J. Johal: Prior to lunch, my conversation with the Attorney General was in and around the impacts of COVID on ICBC. I think, broadly, we had touched on the fact that there was $158 million in savings, roughly, and a $283 million decline in written insurance premiums.

[1:35 p.m.]

My question to the Attorney General. Is there any other major insurer in North America that claims losses from policy cancellations? Policy cancellations are exceeding savings from reduced claims. We have $158 million in savings, yet a $282 million decline, $18 million in written insurance premiums. Are there any other major insurance providers in North America that are doing the same?

The Chair: Minister.

Hon. D. Eby: Thank you very much, Madam Chair, and welcome to the chair.

I am joined by the ICBC senior management team and staff and members of the Ministry of Attorney General staff, who are assisting me. Thank you to them.

The member’s question is an interesting one, but ICBC does not have quarterly data for other insurers in Canada. One caution and caveat that I can provide to the member — well, two, actually — is that ICBC’s book is entirely auto. They don’t have any other lines of business. Most insurers do. So when comparing insurers, be sure to keep that in mind.

The second is that the premium number is an annualized number, which, if there were no change, if people cancelled their insurance and then didn’t come back on before the end of the fiscal year, that number would stay the same. But if they come back on, that number will decrease.

Our expectation and hope is that the COVID situation continues to either be stable or to improve in British Columbia and that more people will be coming back on with premium as business gets more back to normal and people are driving to work and so on. Our hope is that that number will actually come down — but it is an annualized number — compared to the savings projected from collisions, year over year, which is a point-in-time number for that period of the year.

It’s the hope and expectation that that number would remain the same and, in fact, is very likely to grow, in terms of savings, over the rest of the year, as, hopefully, more collisions continue to be avoided because of reduced traffic and also other safety measures put in place by government.

J. Johal: Thank you, for the answer, to the Attorney General. As he’s aware, there have been rebates offered in other jurisdictions due to COVID. In the United States, various states’ private insurers have provided rebates. In Ontario, there have been rebates of about $140 to $160, each one company is different, as there has been in Manitoba.

Is the Ministry of Attorney General considering rebates for British Columbians for this fiscal because of what has happened during COVID?

Hon. D. Eby: The availability of rebates or any other kind of initiative with surplus depends on there being a surplus at year end. The challenge for ICBC, compared with many other insurers, including Manitoba, is that they do not have the capital reserves that those insurers have because those capital reserves were spent down over previous years. I think the member is familiar with that. Those reserves are not in place.

When Manitoba issued their rebate, they were very clear that the reasons they were able to do that were two. First was that they had strong reserves that exceeded, actually, the amount of reserves that they needed to keep. The second was that they had, even despite COVID, collected more premium than they needed to, in terms of their expected liabilities.

ICBC is not in that position, but what I can say is that the trends are very hopeful that ICBC will be seeing some sort of financial benefit from reduced collisions. But it is too soon to say for a corporation that has no safety net. It has no capital reserves.

[1:40 p.m.]

I can also advise the member that we have received correspondence from the B.C. Utilities Commission cautioning government to be aware of the precarious situation of ICBC’s capital reserves in making any decisions about allocating surplus in any given year in relation to basic insurance.

These are the considerations in place, but as the member will also know, we just finished third reading and passed a bill that required that any surplus will go to the benefit of B.C. drivers. That could be through rebate, or it could be through allocating money to reserves, which would have a couple of significant impacts. One is it would cushion drivers from future rate shock, and the second is that the revenue from the invested reserve will offset the potential need for future rate hikes, as it has in Manitoba.

With that change, the guarantee that government has made to British Columbians is that any surplus will remain with drivers, whether in the form of a rebate or staying with capital. The decisions, though, won’t be made until we’re in fiscal year-end and we actually see where we’re at financially with the corporation.

J. Johal: I’m glad we’re having this conversation, because I think, as you know very well, British Columbians are still hurting and need any help that they can get.

I just want to move on to another COVID-related issue, one that’s been in the news for many months now, and that’s the backlog in road tests. Can the Attorney General update me as to what the backlog looks like right now in regards to road tests in British Columbia?

Hon. D. Eby: Pre-COVID there were about 50,000 booked driver’s licence tests in the system that were cancelled as a result of COVID. We have been advised by ICBC that they have been resuming booking tests, and tests have actually fully resumed for all categories of licensing. There is no backlog on the commercial side. People are booking as pre-COVID.

[1:45 p.m.]

On the class 5 and 7 side, it’s a staged return. Everybody is working, and the tests are booked as before, but priority is being given to people whose tests were cancelled, in the order that they were cancelled. So those tests that were cancelled mid-March to mid-April are getting first choice, and then mid-April to mid-May second choice, and so on. They’re being contacted directly by ICBC to reschedule those exams.

In the post-COVID environment, driver examiners are not able to do as many tests in a day as they did pre-COVID. The reason for this is because of cleaning and ensuring that personal protective equipment is distributed and worn properly before the exam begins. Because of that loss of efficiency, as well as the fact that so many tests had to be cancelled, ICBC has made a number of changes to increase capacity.

First of all, they have redeployed 100 people within the corporation to support licensing. This is a mix of driver examiners and administration people. In addition, 50 temporary external employees have been hired to do driver exams, for a total of 150 additional employees working on the drivers licensing side to both make up for the loss in efficiency due to personal protective equipment and cleaning requirements but also to work through the backlog.

The second initiative is to increase the availability of overtime for those who work in drivers licensing areas. ICBC has also, in the last couple of weeks, deployed an improvement to their online booking tool for road test booking, as well as booking appointments generally at ICBC through their online electronic booking site to minimize the need for people to physically attend at locations. It also has the benefit of being more efficient.

Then, finally, ICBC is identifying additional locations where driver’s licence testing can take place, to ensure that there is sufficient space for people to do the tests with the additional capacity that’s being brought on.

J. Johal: I thank the Attorney General for that answer. Can you tell me how many road tests were done on an average month pre-COVID — class 5, class 7?

Hon. D. Eby: I can advise the member that the average number of tests across all categories, including commercial, is about 20,000. Staff are working to get the numbers on classes 5 and 7, but it’s going to take a few minutes, so we can move on to the next question. I’ll advise the member when I get those numbers.

I also want to clarify my previous response that the 50 external employees are going through interviews and training right now, so they’re not all hired yet.

J. Johal: I thank the Attorney General for the answer. So once those 50 are fully trained, we’ll be up to 150 people conducting tests. There has been a reduction in the amount of tests just because of safety challenges that are there, and you’re opening additional locations.

How long does the minister believe it will take to eliminate this backlog of 50,000 plus the 20,000 you do every month anyway? That’s still a significant amount of tests that need to occur. How long does he think it will take to remove the backlog here in British Columbia?

[1:50 p.m.]

Hon. D. Eby: The best information that I can provide the member is that ICBC expects that by September, wait times should be about what they were pre-COVID for class 5 and class 7 licensing. As I mentioned earlier, for the commercial testing, we’re already there, but the expectation is by September.

J. Johal: Thank you to the Attorney General. I want to move over to a few questions on premiums, if I can.

ICBC had publicly reported that the average premium for 2020 is $1,900 per year, and that once no-fault insurance is introduced in May of 2021, there will be an average of $400 in savings. So the average premium will be about $1,500 after May 1, 2021.

I’m just wondering. How did ICBC calculate its average premium? What did they include? Was it simply a matter of taking the total premiums ICBC receives from the private passenger vehicles and dividing by the number of PPVs that ICBC insures? I’m just curious as to how you got that number down to 1,500.

[1:55 p.m.]

Hon. D. Eby: The short answer is that it is total premiums divided by the total number of policies, excluding trailer policies. Getting into a little bit more detail, it assumes full coverage, including basic plus optional, which is third-party liability and comprehensive.

Then I want to provide a little bit more detail about why we have some confidence in the savings numbers. This will all be part of a filing to the B.C. Utilities Commission on December 15. But the savings projections are based on work done by ICBC’s internal actuarial team. That work is reviewed by the external actuary firm called Eckler associates, and that external review was provided to the B.C. Utilities Commission.

In addition, Ernst and Young did an independent assessment of the projected savings in order to either confirm or correct assumptions made by ICBC.

The projected savings are based on data provided by Manitoba and Saskatchewan but has been modified to do something called the B.C. overlay, which is to recognize that when comparing data between Manitoba, Saskatchewan and British Columbia, there are differences, year over year, in certain categories that needed to be incorporated into a model to determine what B.C.’s experience would be more likely to be like under the new model of insurance.

There are a number of safeguards and oversights in place. This will all be submitted to the B.C. Utilities Commission in mid December, and the B.C. Utilities commission will do their own analysis with their actuarial team of these assumptions and provide….

J. Johal: Can you give me the breakdown of the $1,900 premium between basic and optional?

Hon. D. Eby: The $1,900 is actually $1,898, and that number breaks down into $985 average basic insurance and $913 average optional insurance.

I told the member I would get back to him on average class 5 and class 7 licence tests conducted in a month. That average is 18,000. The remaining 2,000 are the commercial classes of licence tests.

J. Johal: In light of COVID-19, is there any change to ICBC’s average premium for 2020?

[2:00 p.m.]

Hon. D. Eby: The average premium is decreasing. There are a few reasons for that.

ICBC reports that they’re seeing people reducing the level of third-party coverage that they have. People might go to their broker and remember having conversations about how much third-party coverage they want — $1 million, $2 million or $3 million. People are shifting that coverage downwards from, say, $3 million to $1 million to save some money. We’re eliminating that optional coverage altogether.

The deductibles…. People are opting for higher deductibles on their insurance to save money.

There is also a change and a shift in rate class. More people are shifting from commute class to pleasure-use class, which reflects that many people are telecommuting for jobs or have lost employment.

Then, also, the size of some of the larger fleets has been reduced as a result of COVID. That affects the denominator of the calculation and affects the average premium number.

I do want to note, though, that that should not impact the 20 percent of projected savings from the enhanced care model. If someone is buying less optional insurance, they will still see the 20 percent saving in terms of the optional insurance that they’re buying. The percentage will remain the same. However, if they’re buying less, it will be 20 percent of a lower number.

I also want to note that it is, as I said in some earlier answers, our expectation that, as the economy restarts and people are heading back to work, the premium numbers will be balancing out towards the end of the year, hopefully, as we continue to see stable infection numbers or improvements in British Columbia.

J. Johal: I’m going to ask one more question, and then I’m going to hand it over to my colleague from Surrey–​White Rock.

Does the Attorney General have the average premium forecast for the next five policy years?

[2:05 p.m.]

Hon. D. Eby: The short answer is no. The somewhat longer answer is that ICBC does do a fair bit of work trying to project where claims-loss trends are going, but there is a huge amount of uncertainty in terms of calculating where a premium will end up year over year.

The energy tends to go into identifying broad trends of increasing numbers of collisions, for example, or decreasing numbers of collisions, or increasing numbers of litigated claims or so on, and the impacts that those might have on future premiums. But there is not a five-year collection of projected premiums.

T. Redies: Thank you to the AG for giving us some time to ask a few questions here and the staff, as well, for all their work.

I’m going to ask a few questions around ICBC’s financials and, in particular, the financial portfolio. My first question is…. I presume there is a board-approved investment strategy for ICBC’s financial portfolio. I just want to know if the AG is aware of it and whether or not he has read it.

Hon. D. Eby: Yes and yes. I’m both aware of it, and I have read it.

T. Redies: Great. Thank you. I guess my second question is: can the minister tell us what the value of the financial portfolio was as of March 1 and what it was as of March 31, 2020?

Hon. D. Eby: For those specific dates, it will just take five minutes for staff to get that. So if the member has another question, maybe I could come back to that.

T. Redies: All right. While we’re waiting for that…. Again, these may be specific questions that will need a little bit of research, but what I’m looking for is to understand how much of the financial portfolio that ICBC has is invested in equities, in both percentage and dollar terms.

Hon. D. Eby: If I could just clarify the member’s question, is it in relation to as of today?

T. Redies: As of March 31, 2020.

[2:10 p.m.]

Maybe while the minister is doing that, I can just clarify, too, that my second question was going to be what they are today, so if he has that information.

Hon. D. Eby: I apologize to the member for the delay.

The investment policy set by the board is that ICBC’s investment mix should be 23 percent equities, 67 percent fixed income, 8 percent real estate and 2 percent infrastructure.

I can advise the member that the audited value of the investment portfolio as of the fiscal year-end of March 31 will be released in August. The reason it’s not released before that is that there are a number of accounting rules and policies that are applied to the valuation of the portfolio that need to be audited and reviewed to confirm that the calculations are correct before they’re released publicly.

The final audited financial report of the value of the portfolio will be released in August with government’s year-end financial report.

[2:15 p.m.]

T. Redies: Thank you, Minister, for that answer.

The value of the total portfolio I believe was around $18 billion to $19 billion going into 2020. Does that mean that 23 percent of that, say, $20 billion, which is about $2.3 billion, is invested in equities?

Hon. D. Eby: That is a good back-of-the-envelope calculation. The member’s numbers from the end of fiscal 2019 are correct. So 23 percent of that comes out to about $4 billion, give or take. There are slight variations from the investment policy but not a significant variation, usually.

T. Redies: Thank you for that answer, Minister. So between March 1 — actually, it was more close to March 15 — and March 31, the markets fell about 25 percent.

Should we be expecting a $1 billion loss on that portfolio that’ll have to be recognized as of March 31, 2020?

Hon. D. Eby: There are two variables that make it difficult to do a back-of-the-envelope calculation the way that we just did for this particular piece. The first is that there is a wide array of potential equities held by or on behalf of ICBC. The particular impact of the downturn in the market during that period is realized through something called an impairment charge.

The accounting rule, as I understand it, as I’m advised, is that when the value of any particular portion of your portfolio decreases beyond 20 percent from what you paid for it, you need to record that as an impairment charge or as a loss in your accounting. And I’m not pretending to explain that to the member. That is for the public. I’m sure she’s very familiar with this through her background.

It is highly dependent on the cost that ICBC paid for any particular equity as well as what equities ICBC held and how they were impacted during that period. And that information will be released in August with the public accounts in relation to this capital fund.

T. Redies: Thank you, Minister, for that answer. I appreciate that there are variables here, and I imagine the management of ICBC is having to struggle with this to some extent, because it is quite complicated.

I guess what I’m trying to understand…. I mean, there could be losses in the financial portfolio, but if they’re offset, in terms of the rest of the performance of ICBC, then it doesn’t back up onto the government’s financial performance.

My question. Does management of ICBC believe that the losses in the financial portfolio will be offset in full by the other things that are happening in ICBC, the improvements? If not, do we have any indicative of how much that is going to impact the government’s year-end financial position?

[2:20 p.m.]

Hon. D. Eby: The fiscal year-end for ICBC is exactly what is going through the auditing process and review for public accounts for release in August. I can advise the member that on a go-forward, similar reports to the Q1 report will be released every quarter. The Q2 report is due in September. So that report will be out to give the member an indication of where ICBC is financially.

In terms of key financial reporting dates, August will be fiscal year-end for fiscal 2019. September will be the Q2 numbers to give an indication where we are as a result of COVID impacts. And then December will be the reports to the B.C. Utilities Commission on the projections around the enhanced care savings related to rates.

T. Redies: Okay. So I guess we’ll have to wait until then to see what type of impact this is going to have on the province’s year-end.

In the first quarter, as everything was unfolding, we heard about some of the challenges with WorkSafeBC losing $1 billion on its portfolio. ICBC’s is roughly around the same amount as WorkSafeBC’s. This is one of the challenges when you have big, large financial portfolios. Changes in volatility in the equities market can be really significant, even if the amount that is invested and percentage that is invested in equities is not that large a number.

My question to the minister. Knowing the investment strategy, having seen this type of volatility, are you comfortable with ICBC’s investment strategy with respect to equities? Are there any plans to reassess or have the board relook at that, just in light of some of the economic uncertainty that we’re going through right now?

[2:25 p.m.]

Hon. D. Eby: I would encourage the member to use caution around projections of impairment charges taken by ICBC on the year-end, as a result of the shift in the market over the last couple of weeks of March, until the audited financials are out. I’ve heard $1 billion a couple of times. Those numbers are not in yet.

With respect to the investment policy, the general process at ICBC is to review the board’s investment policy every two years. Investment policy is a long-term strategy document; it’s not a short-term investment document. That review is done every two years to make sure that it is responsive to market conditions and so on.

I can also advise the member that there is a review currently underway of the investment policy because of the shift in business at ICBC because of enhanced care. There are shifts in terms of how that business operates and how the capital reserves are used in a system of enhanced care versus the tort-based system. So the review is being done to ensure that the policy makes sense.

I can also advise the member that a decision was made — prior to COVID, this took place — to shift investment management out of ICBC to the B.C. Investment Management Corp. and to have that work done by them. They manage government pensions as well as other government investments on behalf of the province. As part of that work, BCIMC has also been working with ICBC to ensure that the policy is responsive to market conditions and the needs of the corporation.

T. Redies: Believe me. I would prefer to be using the actual numbers, but those aren’t available to us. So I’m just surmising based on the percentages that we talked about and what could have happened here. Obviously, the key, I think, for the public is to get transparency about what has actually happened at ICBC and how it’s affecting the province’s financial picture.

I think the move to BCIMC is an interesting one too. Was that done because the…? How do I say this? Some of the portfolio management at ICBC, the results, have been a bit spotty over the last few years. Is that why ICBC is moving the portfolio management to BCIMC?

Hon. D. Eby: The decision to shift the investments to BCI was based on the ability of BCI, given their significantly larger portfolio size, to leverage investments that would not be available otherwise to ICBC.

It also created the possibility to eliminate the need for ICBC to maintain a separate investment management infrastructure, with associated demands around salary in that sector, when there is already such an infrastructure in place, paid for by government, through BCI. It would be an incremental cost for BCI but savings for ICBC not to be doing that work in-house.

There was an investment study done to determine what ICBC’s returns would have been internally versus returns had they been managed by BCI, based on BCI’s average investment return, and it found that ICBC’s investment strategy would have produced consistent returns with the B.C. Investment Management Corp.’s returns.

[2:30 p.m.]

The benefit of the shift is really going to come through future opportunities that BCI can bring to the table because they are so much larger.

T. Redies: Thank you, Minister, for that answer. I actually think that’s a good move. It makes a lot of sense with BCIMC’s expertise. So I hope it all works out.

Just one final question from me. Given, again, the volatility in the financial markets, are there any issues with ICBC’s pension position, any unfunded liabilities that we should be aware of that also may need to be taken into consideration in the financial statements?

Hon. D. Eby: I’m advised that the pension is evaluated on a going-concern basis, which I’m advised — again, with apologies to the member; I’m not attempting to explain this to her — assumes that the pension is continuing on the existing liability and contribution basis. So on a going-concern basis, ICBC’s pension fund is well funded, and there are no liabilities, I’m advised, that would impact financial statements.

T. Redies: I thank the AG for their answers.

I believe my colleague from West Vancouver is going to be asking questions next. So I’ll say goodbye.

R. Sultan: Thank you for this opportunity to ask the hon. Attorney General some further financial questions about our taxpayer-owned automobile insurance company.

ICBC ran successfully for 16 years under the stewardship of the previous government. ICBC has been run unsuccessfully for three years under the stewardship of this present government. So unsuccessfully, in fact, that the Attorney himself used rather colourful language to describe it. It was a “dumpster fire.” Some might agree with him.

The only problem is that it was not even smoldering when the Attorney took over. The fire was raging only a year later, Attorney. I will illustrate this with a walk down financial memory lane. I should add that I had the invaluable assistance of a former chief financial officer of ICBC in my number meanderings — a fellow of the institute of chartered accountants.

I will refer to six charts, which I plotted, describing ICBC’s finances before the handover and after the handover in 2017, what you might call a before-and-after analysis. I plotted these charts myself, with my own two fingers, in order to reveal inflection points. Well, what’s that? These are kinks in the trend line, a basic change in trend conveniently separating before NDP from after NDP. So that was my basic approach.

I’m not allowed to use props in this wonderful Legislature here in West Vancouver. It was just so I could hold them up to the television camera, but I don’t even think that’s allowed. I will describe the six charts to you, and they will form the basis of my questions.

You’re at a bit of a disadvantage because you don’t have the charts. I’m offering a copy of them to anybody, including the AG. All they have to do is call my office, and they will be emailed to them, along with a copy of my wonderful remarks.

[2:35 p.m.]

Chart 1 shows profit and loss. Simple. Before the handover, ICBC made a decent profit. After the handover, ICBC lost a ton of money. Is this a coincidence? You might call it one of those inflection points.

One thing I’ve learned about accountants is they try hard to deliver a financial report living up to the client’s expectations. With suddenly so much red ink where there was none before, they certainly earned their keep.

Rob Shaw, in February of 2019, summed up the financial picture as follows: “It will mean ICBC lost almost $2.5 billion over two years.” He forgot to mention those were the NDP years. That didn’t inhibit the AG from announcing, again, that slogan, “Dumpster fire at ICBC,” which he attributed to rising claims and legal costs.

The impact of the dumpster fire is further illustrated in my chart 2, available at no price from my office. This shows the net worth of ICBC as reported on the balance sheet, the value of this company to the taxpayers of British Columbia, who own it.

Before the takeover, ICBC had a shareholder value in the range of $3 billion plus. After late 2019, under the AG’s stewardship, the shareholder value had plummeted almost to zilch. Close to zero, Attorney. From $3 billion down to zero. That’s an accomplishment, a serious inflection point.

My first question to the minister. When the financial results prior to your stewardship were pretty good and the financial results afterward were pretty awful, wasn’t it actually under your stewardship that the dumpster fire occurred? That’s my question. All it takes is a calendar.

Hon. D. Eby: I’ll begin by noting that the member has definitely placed the appropriate price on his charts. I do appreciate his efforts.

The challenge with ICBC. I think the member knows this. I think it’s fun, but I think the member knows this. Over the period of the previous government, rates were subsidized by using ICBC’s capital. Government was subsidized by using ICBC’s capital.

The unfortunate challenge is that the capital was used up when the government was transitioned over. The capital was so used up by the end of the term of the last government that items were booked in the financial reports of ICBC to mitigate the appearance of what was happening, which was significant gaps — I can show the member a graph — between premium collected and costs of operation.

That gap is one that spells trouble. It was ignored for an extended period by the previous government. It was so bad that the previous government actually booked the sale of things like the ICBC headquarters, icbc.com, the URL, to the…. I think it was the Industrial and Commercial Bank of China that was interested in buying it for $10 million. Of course, it wasn’t actually sold, but these things were booked in order to prevent the public from knowing the true state of ICBC’s financial situation.

Obviously, when a government came in that had little interest in perpetuating the myth of a well-managed ICBC by doing such accounting manoeuvres as this, the gap between the premium collected and the actual expenses of running the corporation made itself apparent very quickly.

[2:40 p.m.]

Now, there’s no question that we could run the capital down to zero. But I think the words of the Leader of the Opposition — that when the previous government was done with it, ICBC was basically worthless — sum up a fair assessment. Without reform, ICBC would chew through the remainder of the capital reserve, be a huge drag on government’s books and not be an asset to the people of British Columbia. I think it’s unfortunate. I think it’s the legacy of the previous government. And the member’s charts will not change that reality.

With that said, we have made significant reforms. Pre-COVID, we were projecting a break-even year for ICBC last fiscal year. The numbers are still being worked on. Obviously, we took some impairment charges in relation to the equity book that I was speaking with the previous member about. But the big shift — the member will know that we’ve had a lot of debate about this in the Legislature — is in relation to the shift to enhanced care, which will provide financial stability for the Crown corporation but, more importantly, affordable insurance for British Columbians, and better benefits.

It has been a lot of work, and it’s a lot of work that should have been done when the report was received in 2014 by the previous government. The shift needed to happen, but instead of doing the shift in 2014 when there was lots of time, the previous government ripped out of that report, before it was released to the public, the pages that related to the need for this shift. It’s not a great record. I’m surprised the member would go there, just given that he has been an observer at this place for a while. He knows, as well as I do, the mismanagement….

R. Sultan: Okay. Chart 3 — which, again, is available at a very extraordinary price from my office — shows the trend in average insurance premiums charged by ICBC.

All you do is take the total revenues and divide it by the total number of customers, and you get a number. Let’s call that the average premium. Under AG stewardship, ICBC’s first impulse, which is very a tempting impulse on the part of anybody with a monopoly position, was to raise their prices.

I remember vividly the day in the Legislature when the AG explained that this was a mere rebalancing so that the low-risk drivers would actually pay a bit less and the high-risk drivers, deservedly, would pay more. Who could sensibly argue with that?

Those of us who — like me, despite my age — considered ourselves rather careful drivers, expected a price reduction. We were assured that it would all work out in the end. Well, in reality, the drivers with poor risk ratings did get hammered, but so did everybody else. The promise that, on average, prices would be unchanged for British Columbians, as a class, was quickly forgotten.

It’s quite clear from the inflection point on chart 3; call up MOT and get a copy. The average price of an ICBC insurance policy during the pre-changeover years, the pre-takeover, had been growing in line with inflation, about 2 percent a year. Under the NDP, it rocketed up at 6 percent a year. So affordability quickly became a political issue — it still is, as a matter of fact — and it’s all very clear when you just look at the inflection points.

My second question for the minister is: would he concede that, under financial pressure, given the financial condition that has developed under his stewardship, ICBC accelerated upward its insurance premiums, essentially, for everybody?

[2:45 p.m.]

Hon. D. Eby: Madam Chair, the member is one of the most regular attendees of the Legislature. He’s been there as we passed legislation to dramatically reform ICBC in two stages. One was in relation to how minor injuries proceed through the court system and the other in terms of the shift through the enhanced care model. So to hear the member suggest that the first go-to was to increase premiums is bizarre.

The political debate has been around removing the legal costs from the system and driving down what I would describe as inappropriately escalating personal injury, pain and suffering awards for more minor injuries. That was not at no political cost, and that was not an insignificant set of changes taken on by a government in a minority parliament.

I do understand that the member voted against many of these reforms, without explanation — other than, I guess, that British Columbians could pay what they would have had to pay had these reforms not been made, which is an increase of 37 percent in their premiums. So to hear the member both vote against reforms that are badly needed to drive down costs and deliver low premiums to people and then suggest that it’s the government that wants to increase the premiums, when his votes in a minority parliament just about achieved the goal of higher premiums for British Columbians on a dramatic scale, is a bit bizarre.

I think he should be upfront with British Columbians that he just voted against a 20 percent rate decrease for British Columbians.

R. Sultan: Okay. Well, I feel very chastened.

I’d next like to describe for the record my charts 4, 5 and 6, each displaying that telltale inflection point before and after, once again. Chart 5 shows ICBC’s unpaid claims from ’09 through 2020, estimated. Chart 5 shows insurance claims actually paid — not claimed but paid — over the same approximate period. Chart 6 shows annual claims expense, as shown on the earnings statement. Just email my office for copies.

What do these three charts say? Well, it’s quite clear. Unpaid claims, which are a liability — a British Columbia taxpayer liability, in fact — grew steadily at about 8 percent a year under the previous regime, but bumped into the NDP inflection point and then started growing along a 12 percent per year annual growth path. That’s quite an acceleration, Attorney.

Meanwhile, and curiously, claims actually paid headed south instead of north, which I can only describe as remarkable. What is even more remarkable is that annual claims expense — showing up on the profit-and-loss statement — actually went down. It’s really a marvelous thing, this inflection point. Claims skyrocket, payments actually shrink, and expenses go down. The AG — I compliment him — has entered accounting nirvana, an entry marked by significant inflection points all along the way.

[2:50 p.m.]

My third question to the minister is: how can this or any other insurance company show rapidly accelerating claims, no growth in claim payouts and even a year of shrinkage — no payments or claim settlements growth at all — and, strike three, a declining claims expense? How do you do that?

Hon. D. Eby: I don’t mean to take anything away from the member’s charting. But I will point out that the previous government commissioned a report by Ernst and Young that was delivered in July of 2017, basically during the interregnum. That report projected that premiums would increase to $2,000 by 2020 if no changes were made.

Now, that also follows on the 2014 report, which I identified for the member, that identified all of these trends and told the previous government to take action and, in fact, to bring in reforms very similar to the ones the member just voted against. So he has been consistent in his position.

In any event, the July 2017 Ernst and Young report that projected these premium increases was right if no action was taken. I can advise the member that action was taken, but unfortunately for ratepayers, not by his government but by ours, which is how we were able to have a zero percent rate impact for British Columbians in this fiscal and how we’re projecting a 20 percent, on average, rate decrease for British Columbians in May of 2021.

I can also advise the member of some numbers that he could add to his chart, which are the indicated rate versus the rate that was charged. Indicated rate means the rate the actuaries tell you that you need to charge in order to cover expenses.

In 2015, the indicated rate was that an 11.2 percent rate increase was needed in order to cover expenses. ICBC was approved by direction through the previous government to do a 5½ percent rate increase. That gap was made up for by paying for it out of the capital reserves of ICBC. In 2016, again, 15½ percent was the indicated rate increase; 4.9 percent was the permitted rate increase. In 2017, 20 percent was the indicated rate increase; 6.4 percent was the authorized rate increase by the previous administration.

When you see your indicated rate increases going from 11.2 percent to 20 percent, that should be, one would think, a warning sign that things are going very badly indeed. That gap between the rates that are actually charged versus the rates that you need to charge in order to cover your expenses is a gap that no business, government or otherwise, can sustain for long.

[2:55 p.m.]

Again, the challenge is that this happened on his government’s watch, well documented in a report commissioned by his government — not even commissioned by our government — by Ernst and Young. That is also freely available on the ICBC website as well.

R. Sultan: Final question. This is kind of semi-personal. Since the unpaid claims on the ICBC balance sheet towards the end of last year reached the vicinity, give or take, of $15 billion, which is more than 20 percent of the total provincial debt, over 20 percent of the total provincial debt…. This is money certain people out there, justifiably or not, claim our insurance company owes them.

Did one day, because his office is at one end of that magnificent building we are now barred from attending, most of us, on the first floor, and the Finance Minister is at the other end of that large building on the same floor…? Did the Finance Minister one day come down the hall, come into his office, sit down on the corner of his desk and say: “Attorney, what on earth are you doing at ICBC running up such an enormous liability, payable at the end of the day, if necessary, as an obligation to the provincial taxpayer? What are you going to do about it — $15 billion? This is really kind of crazy.”

If I was the Finance Minister, certainly I would come down the hall, sit on the corner of your desk and have that conversation.

That’s really the end of my remarks.

Hon. D. Eby: I’ll just say, given the member’s attention to detail, I do wish to some extent that he had been the Finance Minister under the previous administration. Maybe he would have taken aside the minister responsible for ICBC and said: “Hey, you’ve got this growing gap between the rate that you need to charge to make the bottom line and what you’re actually charging. How long do you expect this to go for before the whole house of cards collapses into billion dollar losses?”

It would have been helpful if he’d sat on the corner of the then Minister of Transportation’s desk and had that conversation, but unfortunately, he was not the Finance Minister — if he were inclined to ask questions like that and to intervene when he saw growing liabilities and concerns.

With that little editorial aside, I’ll note that there are two challenges with what the member has presented. One is that ICBC does have assets to cover those liabilities that he’s identified. That is, the capital reserve fund that we have been talking about in previous questions. The second is that ICBC’s debt does not roll over to government in the way that the member describes.

J. Johal: I just wanted to follow up on a question asked by my colleague from Surrey–White Rock in regards to ICBC’s investment portfolio.

Are the losses in ICBC’s insurance portfolio the reason why ICBC is not included in the $12½ billion government deficit?

Hon. D. Eby: Just a point of clarification to the member’s question. He’s referring to the Finance Minister’s update about the impact of COVID in terms of the $12 billion. His question is: why is ICBC not included? Is that due to the investment piece? I just wanted…. I see him nodding. Okay.

[3:00 p.m.]

I don’t know exactly the reason that the Finance Minister gave for not including ICBC, but the obvious reason, from my perspective, is that the numbers were not finalized at the time of her announcement and had yet to be finalized in terms of the public accounts that will be released in August. So that would include the investment portfolio but also any other calculations in terms of ICBC’s financial year.

J. Johal: A couple of housekeeping questions as well. We talked about the $1,900 average price when it came to the premium. I just want to confirm that that price is set on January 1 of the year.

Hon. D. Eby: It’s the average for the prior year, and it’s on a fiscal year basis. So it’s as of March 31 of the given fiscal year based on the previous year’s indications.

J. Johal: Just to confirm one other issue that he and I had talked about. I just want to confirm on the record that ICBC uses private passenger vehicles, or PPVs, they insure to calculate the average price.

Hon. D. Eby: Generally speaking, it’s personal vehicles. I say “generally speaking” because I’m advised that some people do use their personal vehicles for business as well. For example, if you’re a real estate agent, you’re using your vehicle for personal as well as commercial purposes. But generally, yes, it’s personal vehicles. And as I mentioned in an earlier answer, trailers are excluded.

J. Johal: Thank you to the Attorney General for that answer.

I want to move over to optional premiums just for a second. We have been told by ICBC that things are improving and that there’s a zero percent basic rate increase for April 1, 2020. But overall, premium revenues have increased by about $343 million. That would suggest that optional rates are continuing to increase. Can the Attorney General tell me what the optional rate increase is this year?

[3:05 p.m.]

Hon. D. Eby: ICBC doesn’t release optional premium rates because it is in a competitive market, and that would be information used by their competitors to take market share from ICBC. But I can advise the member that that growth in that number is not…. It’s not correct to attribute that to growth in optional rates.

That growth tends to come from two different areas. The first is what ICBC describes as policy growth. This is where we see growth in population in the province or growth in commercial fleets due to economic growth and so on. This is 1 to 2 percent of growth in policies, for example. If you’re seeing that kind of growth in the population, you could also see that kind of growth in policies.

The second area of growth is something that ICBC calls a mix. That is the mix of vehicles that are on the road. As older vehicles are retired by their owners and replaced with newer vehicles, the newer vehicles tend to attract more insurance premium because, previously, maybe the owner didn’t buy collision coverage or material damage coverage so that their auto body repair costs…. They were driving a vehicle they didn’t feel was worth fixing, from an autobody perspective, and they only wanted to be covered for liability.

As that mix shifts from older vehicles to newer vehicles, it results in a growth in premium. Newer vehicles tend to attract higher premium levels.

J. Johal: I know we’ve gone through several questions when it comes to no-fault insurance. I know my colleague the AG critic will probably have more. But I wanted to just touch on a couple of issues in regards to no-fault or, as the AG calls it, the enhanced care model.

Does he or ICBC anticipate significant additional resources being required, particularly in staffing, in regards to the moving forward with no-fault in 2021?

Hon. D. Eby: ICBC will functionally be running two different insurance systems over the transition period between the two systems, the tort system and the no-fault system.

That transition between those two systems will work its way through in a period of about three to five years. So there’ll be a start out with a relatively smaller number of people working on enhanced care and a relatively larger number of people working on the tort system, but that will switch over time over a period of three to five years as tort claims run themselves out and the enhanced care takes over.

I will note that there will be a fairly dramatic reduction in people supported by ICBC premiums outside of ICBC as a result of the shift to enhanced care. Often the conversation is about ICBC staff, but I am advised by the Trial Lawyers Association of B.C. that there are about 10,000 people who work in areas of litigation, personal injury law, expert reports, and so on, supporting the litigation process. They will have to transition to other areas of work as a result of the transition to enhanced care.

[3:10 p.m.]

J. Johal: Thank you for the answer of the Attorney General.

Just to confirm, about 10,000 job losses in the private sector. The Attorney General talked about basically two parallel systems running from the old system to the new system. That’s a significant corporate shift and change, obviously, in your processes and your culture as well. Has any budgeting been done? Can the Attorney General provide any budgeting numbers, full-time-equivalent numbers, in regard to what that transition looks like?

I’m just looking for more information in regard to the amount of people that are going to be part of that transition, the software changes that could potentially occur and other costs that will come with that. Can you give me sort of a fuller look at what that transition looks like, particularly in the resources that will be required and the people that will be required?

Hon. D. Eby: I can advise that the anticipated capital cost of this ACE project is $92 million. Keep in mind that we expect it to return $1.5 billion in annual savings for that capital investment.

I also want to note that the member indicated that 10,000 lawyers, paralegals, medical experts, and so on, who support the litigation process under the current system would be, in his words, private sector job losses. I don’t believe that’s correct. First of all, we are desperate for lawyers, paralegals and others to work in areas like family law and other areas.

We expect this transition to take place over a period of five to ten years. We expect most people to transition into other areas of law, as opposed to being what he describes as private sector job losses.

[3:15 p.m.]

Also, it’s kind of hard to describe them as private sector jobs when they’re all publicly funded through a public insurer and B.C. premium dollars, but that’s maybe more of a philosophical debate.

J. Johal: Thanks to the Attorney General for that. He talked about the transition costing $92 million for the ACE project. How many staff members are working on that specific project for the transition?

Hon. D. Eby: ICBC estimates there are about 300 people. That includes both employees and contractors assisting in areas where ICBC employees are unable to or where a particular expertise is needed.

J. Johal: Can the Attorney General tell me how many present full-time-equivalent employees are working at ICBC and how many he believes will be working at ICBC when the full transition occurs to no-fault?

Hon. D. Eby: The current FTEs at ICBC for ’19-20 are 5,674. Of those, about 750 work in non-insurance-related work.

J. Johal: Can the Attorney General give me a sense of how many employees he believes ICBC is expecting to hire, or a projection of employees, once no-fault has been implemented?

Hon. D. Eby: ICBC is six months into the enhanced care project. They have nine months to go before implementation in May of 2021. A lot of the work is currently happening around systems and developing systems automation and so on. That makes it very difficult to predict, with accuracy, where employee counts will be at full implementation.

[3:20 p.m.]

By full implementation…. I’m defining that as the period when the tort claims have worked their way through the system, for the most part, and we don’t have that period of time when both systems are very active.

I do expect, in six months’ time, that we should have a much more accurate idea of what that will look like. Unfortunately, I just don’t have those numbers to provide to the member, given the systems work that is happening right now.

J. Johal: I look forward to those numbers being provided. I think it gives a good sense of the challenges ahead, obviously, to implement these changes that the Attorney General has been talking about.

I just want to touch a little bit on next year. There was a plan for ICBC to send out $400 rebate cheques. Some would argue that ICBC is charging drivers for third-party legal liability at the moment, which they will not need as of May 1, and that the refunds that will be sent next year are simply for the overpayment, while calling it a rebate. One would argue, why doesn’t ICBC just charge the correct amount?

What would the Attorney General say to that assessment?

Hon. D. Eby: With respect to the B.C. Utilities Commission process, there will be a filing to confirm the rate in December. That filing will assist ICBC in knowing the amount that needs to be refunded to people on the basic side. On the optional side, that work will also be done, in terms of individual driver profiles, as part of the project work that is continuing.

The challenge is knowing the exact amount for each customer at the time that they’re renewing their insurance. This necessitates, unfortunately, having to provide rebate or overpayment cheques. However the member wants to describe the payments, the bottom line is that once the new system is in place, ICBC doesn’t have the authority to hold that money, because they don’t need it for premium, and it’s under a different a system. So that money needs to be sent back, one way or another.

People who paid by credit card will get it paid back through credit card. People who paid by cheque or cash will see a cheque to cash in the mail. ICBC is in the process of posting an RFP for a vendor to do this, because there is a significant number of people that will need to see a return of the money that they….

J. Johal: One of the other things that I wanted to touch on was ICBC’s financial plan. Now, the corporation projects to lose over $700 million on the sale of insurance over the next three years under no-fault. The books are balanced, I think solely by the virtue of ICBC’s investment income, which will be challenged under COVID.

I guess the question to the minister is: are these savings sustainable, and can the minister commit today that rates won’t rise again after the next election, whenever that is?

[3:25 p.m.]

Hon. D. Eby: The impact of the new system on year 1 and year 2 rates under the new system will be part of the December filing to the Utilities Commission. So that information will be available to British Columbians, in terms of the impact of the new system, on a go-forward basis.

I can certainly confirm that the next fixed-date election period is October 2021, which is the latest date for another election. And with implementation in May of 2021, that would obviously be within the period of the first-year rates. But as I said, with the Utilities Commission filing, British Columbians should have a clear indication of projections around future rates as well.

J. Johal: I want to go back to the Attorney General’s earlier response on the issue of third-party liability, and the Attorney General not knowing how much will be needed.

I think that it’s fair to say that you are really taking with one hand and giving back with another here, ultimately, in regards to this rebate. Why not just provide the rebates today, or at least the savings, sorry, in the premium rather than keeping the money and then returning it later on? It’s sort of, as I’ve said, taking from one hand and giving with another.

Hon. D. Eby: I agree with the member that that would definitely be a preferable approach. The challenge is all of the back-end work in order to deliver that kind of result is happening right now. That includes the systems even just for providing the rebates or refunds or so on.

It would be nice if we had the ability to do that. In order to deliver that, it would probably require an additional project of significant scope on top of the work that is already being done. There’s not a way around it. If there was, we would try to find it.

The best solution that we can come to is if we have the money returned to people on implementation date. In January of 2021, we expect there to be a calculator in place so that people can see their projected future savings based on their own personal characteristics. All of this work is happening right now, and that is the challenge around the very reasonable suggestion that the member is making but which, in implementation, is quite challenging.

J. Johal: One of the other conversations that we’ve been having was in regards to the $700 million potential losses over the next few years when it comes to ICBC. If ICBC’s projected investment revenue doesn’t come to fruition, which one would say is reasonable, considering the challenges that we’re all going through globally in the financial markets when it comes to COVID, is it fair to say that the balanced budget is in jeopardy under no-fault?

[3:30 p.m.]

Hon. D. Eby: I did go through some of the numbers with the member’s colleague from White Rock in terms of the mix of the conservative investment strategy of ICBC. The COVID situation is not unique in the history of the corporation. Previous recessions and downturns, 2008-09, 2000-01, were similar situations.

What I can advise the member is that there’s a conservative investment strategy that is expected to provide these returns to ICBC. Also, this is a common model in the insurance industry to provide rates to drivers that are subsidized by investment income which is held when the premium is collected but paid out later when the actual damage is incurred. There are similar models on payroll and other businesses.

This is very common to the insurance business. So the underwriting gaps — the cumulative three-year gap of, if I accept the member’s number, around $700 million — are planned and budgeted for — underwriting gaps that are and have been, historically, by ICBC subsidized by investment income. In addition, of course, as the public insurer for basic insurance, there is no profit in the basic insurance product either.

When you think about it, people get quite a…. With a public insurer under an enhanced care system, they’re going to see some very good rates. But when we look nationally, because…. First of all, it’s being subsidized by investment income, but secondly, there is no profit added into it, and third, we’ve removed a significant portion of the legal expenses.

J. Johal: I’m just having difficulty…. We’re talking about the financial health of ICBC here. The underlying losses are going to be $700 million. You’re losing $700 million selling insurance, and you’re relying on the market or the investment income. If that investment income falls…. We’ve seen a financial crisis in 2008. We have a pandemic now. How is this sustainable as an insurance product when there is a $700 million shortfall built in?

[3:35 p.m.]

Hon. D. Eby: I direct the member to the service plan that shows projected year-end results for ICBC — your $186 million, your $248 million, your $391 million — and underline for him the asset mix in the investment plan where the vast majority of the investments are fixed return investments that will continue to pay through the period of the pandemic.

I also point out that the member is looking over a three-year period. I think we’re all hoping for an effective treatment or a vaccine sooner than three years from now, but I accept the member’s caution that that may or may not realize the way that we hope.

The actual numbers are 23 percent equity, 67 percent fixed income, 8 percent real estate and 2 percent infrastructure in ICBC’s investment portfolio. It would be a unique thing in insurance for ICBC to be the only insurer that did not subsidize their rates with investment income and essentially overcharged drivers for the basic product. These are basic rates and a process that goes in front of the Utilities Commission for review. We have confidence that ICBC will be delivering this product in an affordable way to British Columbians….

J. Johal: Thank you to the Attorney General for that answer.

I’m no financial expert, but there’s a tremendous amount of risk for taxpayers when I hear that answer. ICBC has lost about $3.4 billion, I believe, in the last three years, roughly, give or take. Does not this position, this dangerous position…? Isn’t this just a dangerous trend at the end of the day? I mean, I see the asset mix. But at the end of the day, there’s a significant amount of risk when you see the losses that we’ve seen in the last three years.

I know the Attorney General has explained his reasonings why he believes the losses are there. But there’s a tremendous amount of risk here when you’re talking about $700 million on the no-fault side and then the fact that ICBC has lost all that money. It’s a dangerous trend, at the end of the day, to continue along this road, is it not?

Hon. D. Eby: The dangerous trend was the trend that we saw in 2015 through 2017, where the actuary said: “Look, you need to have an 11.2 percent rate increase in 2015 in order to meet the incoming expenses. Then in 2016, you need to have a 15½ percent rate increase to meet the expenses that you have. In 2017, you need a 20 percent rate increase to meet the expenses you have.”

Yet government at that time raised rates at half or a third of what was needed to cover expenses and didn’t address the underlying fundamentals that were driving those rate increases. That is the dangerous trend that led to the billion-dollar losses. It was not a function of investment income in those years. It was a function of simply not collecting enough premium to cover expenses and also not addressing the underlying fundamentals in the system that were leading to those increased demands on premiums.

I accept the member’s caution that maybe something catastrophic will happen to the world economic system that would cause ICBC’s fixed return investments to stop paying. People would have significantly more profound issues in their lives if that happened than whether or not government had a balanced budget. The issue that would arise from that, obviously, is the collapse of the world economic system, which would be quite a significant thing.

[3:40 p.m.]

J. Johal: Just to confirm, based on those $700 million in losses over those three years, if investments fall, taxpayers are responsible for covering the shortfall. I just want to confirm that.

Hon. D. Eby: I can confirm for the member that if the world economic system collapses, the government and ICBC will probably report significant losses as a result of that. But short of that, ICBC has fixed income investments that are part of the insurance business model that results in the pricing that you see.

J. Johal: I just wanted to point out that there is still a tremendous amount of liability there for B.C. taxpayers. Certainly, we all want the system to succeed. It’s just that there seems to be a shortcoming in regards to the ability for ICBC to meet its obligations. That’s certainly my sense of it.

I just want to get back to another answer that I received from the Attorney General. That’s just in regards to full-time-equivalent employees that are needed under the no-fault system. As he had stated, presently at ICBC, there are 5,674 full-time-equivalent employees. I asked him how many employees he believes will be working at ICBC under a no-fault system. He has stated that he does not know at this particular point.

I find that…. It’s challenging for me in the sense that we have all these modelling processes and systems in place. We have experts at ICBC. You have public systems that have gone to no-fault in other provinces. Surely, he must have some sense of what the full-time-equivalent, FTE, numbers would look like. A 10 percent, 20 percent or 50 percent increase — a ballpark figure over the present 5,674. I just want to get a sense of what we’re talking about when the full no-fault system is in place.

[3:45 p.m.]

Hon. D. Eby: A couple of pieces to try to assist the member. I understand his frustration. I can advise him…. Obviously, ICBC is in flight on the project. They’re developing the models around staffing as well as technology and what’s going to be needed.

In terms of a number that the member and the public could rely on, we just cannot provide that. But I can advise, in terms of ICBC’s overall expenses, that 67 percent of ICBC’s overall expenses are administration and staff costs. That gives some perspective of staffing as a driver of overall costs at ICBC.

Legal costs are a significant multiple of those, which is why we are able to provide the savings of 20 percent, on average, and the increased benefits under the new system. So even if there were a significant increase in staffing, the costs that would follow that would be very limited compared to the savings of getting the legal costs out of the system that the staffing would enable.

There’s an equally distinct possibility that staffing will be on a per-capita basis, depending on the growth of the province and so on. It will be similar to the existing staffing. We just can’t provide the member with any certainty around that or whether there would be an increase in staffing.

I think it’s safe to say that there would not be a reduction in staffing under the new model and how it’s designed to provide support to people who are injured. But whether it’s roughly the same or a slight increase or a more significant increase…. That work is also dependent on things like: what do crash rates look like?

This is a number, as we canvassed earlier in the debate, that’s significantly in flux as a result of COVID. Whether numbers stay down, significantly below historical averages, because people are simply driving less or telecommuting more and we’re into a new normal is an important question that we don’t know the answer to yet. That could change significantly by the time we get to nine months from now and implementation, and we’re either back to historic levels of crashes or not. It will inform the hiring for the new system.

J. Johal: We were talking about the underwriting losses of $700 million. Did ICBC or did the government recommend the 20 percent rate cut?

Hon. D. Eby: Sorry. Did government or ICBC recommend the rate cut to whom?

J. Johal: I’m talking about the overall $700 million. In regards to the rate cut itself, what was the process behind that cut, when you have the $700 million in underwriting losses?

Hon. D. Eby: The 20 percent was arrived at through an iterative process of design that began with looking at different models of insurance delivery. It focused on Manitoba and Saskatchewan’s experience, given their public insurance model and also that they have some of the lowest rates and best benefits in Canada.

Looking at their models and putting on the B.C. overlay about historical differences between driver behaviour in British Columbia versus those prairie provinces and associated historical differences between the two systems resulted in an analysis and projections. They were then reviewed, as we canvassed in an earlier question, by Ernst and Young and will be reviewed by ICBC’s external actuaries as well as by the B.C. Utilities Commission actuaries to result in a net benefit.

[3:50 p.m.]

That’s where the average of 20 percent…. It did not flow in the opposite direction where there was a direction from government to reduce rates by 20 percent and for ICBC to find a way to do that or where ICBC began with a 20 percent number and then worked backwards about: “How do we do that?”

It was the opposite. It started with looking at which systems were successful and then modelling those for British Columbia and arriving at financial projections, and that’s what was arrived at.

J. Johal: I’m curious as to how much money has ICBC spent on advertising for the no-fault system, and particularly, how much was spent before March 1, 2020, and how much has been spent since?

Hon. D. Eby: I’ll provide the member with the best numbers that we can here. The total ad spend by ICBC in the last fiscal year that began April 1, 2019, and ended March 31, 2020, was $1.9 million. Of that, $989,000 was spent relating to both enhanced care and COVID changes, so that people were aware of COVID-related ICBC initiatives.

Specifically, and the best breakup of that $989,000 figure I can provide the member is that $426,000 of that was during the COVID period. That advertising was split between…. I don’t mean this to sound like a math problem, but it’s just the numbers that we have. That number was split between the COVID changes and enhanced care.

If the member takes $989,000 and subtracts the $426,000, all of that money was spent — the product of that equation, all of that money, around $550,000 — on enhanced care. Then for the $426,000, some of that was on enhanced care, and it was changed mid-flight to reflect that people needed to know about changes ICBC had made related to COVID. The intention had been to spend it on enhanced care, but it didn’t make sense to advertise that any more in the pandemic.

J. Johal: Thank you to the Attorney General.

I just want to shift a little bit over to rate redesign. When the Attorney General and ICBC announced the rate design changes, there were, of course, many British Columbians who saw significant rate hikes. You saw that on the news. You heard that on talk radio. ICBC at that time — and I think the Attorney General at that time as well — said that two-thirds of drivers will be better off under the changes. ICBC also said that the revenue would be neutral in the first year only.

My question to the Attorney General is: how many drivers are paying less today than they did before September 1, 2019?

[3:55 p.m.]

Hon. D. Eby: I can advise the member that 70 percent of drivers paid less than they would have otherwise paid for their basic insurance as a result of rate design. So slightly better but not significantly better than the two-thirds, one-third that was projected.

J. Johal: I have a couple more questions, Madam Chair.

The Chair: Actually, this will be the last question before we break for ten minutes and give people a little bit of a stretch as well as do our safety cleaning protocols.

J. Johal: Sure. Thank you so much.

The question for the Attorney General is: how much are rates rising under the rate design in year 2, which begins in September 2020? And if there is a rate increase, how much is ICBC’s revenue projected to increase due to the rate design changes?

Hon. D. Eby: The system is designed to be revenue-neutral, as well, in year 2, as it was in year 1. We do expect the majority of drivers to continue to see greater benefit under this system. Now, there are drivers with records that will cause them to see increases under this continuing shift that’s taking place, but all drivers will see the benefit, in May 2021, of the shift to the enhanced care reductions.

The Chair: Members, we will now take a ten-minute recess while we undertake cleaning and safety protocols in preparation for the new committee Chair and a new Clerk.

The committee recessed from 4 p.m. to 4:10 p.m.

[R. Kahlon in the chair.]

M. Lee: I’m just going to continue on here with some questions on ICBC. I wanted to come back to the Attorney General.

When the Attorney General describes to my colleagues the parallel structure that is going to take place between no-fault and the current insurance scheme, I wanted to ask what the projection is in terms of the number of automobile injury claims that will continue to be dealt with in the transitional period.

Hon. D. Eby: I can advise the member that we’re at a bit of a high-water mark in terms of open claims right now. Of course, last month was the previous high-water mark. The claims are being wound down right now. More claims are being closed than are being opened.

Currently ICBC is somewhere around short of 90,000 open claims. These claims are being closed, as I said, more quickly than they’re being opened, so by May 1, 2021, that number will be significantly reduced. However, in terms of how quickly that number will be reduced by May 1, 2021, depends on a whole bunch of factors. It is difficult to predict.

In terms of having some certainty about numbers, there will be at least 90,000, but likely significantly fewer, as of May 1. Then those claims will wind themselves down, it’s projected, over a full decade. But the vast majority will be resolved within the first three years. Then the second most between years 3 and 5. Then between years 5 and 10 very….

M. Lee: Last year in estimates, we had the opportunity to discuss with the Attorney General what was the change in approach on settlements. It was to, certainly, increase the closure rate, as the Attorney General just mentioned.

I’d just ask if the Attorney General could comment on the assessment on it. We were talking about the fact that the change effectively occurred in March of 2019. When we were doing estimates at the end of May in 2019, it was only 2½ months.

The Attorney General indicated that from an actuarial point of view and otherwise, it would be fair to have a six-month to a nine-month run with that new system on settlements. I just ask in terms of what impact that new settlement process has brought about since March of 2019.

[4:15 p.m.]

Hon. D. Eby: This is one of those questions that’s just taking a little bit more time than an ordinary question. If the member wants to ask another question while ICBC is churning away on some of those numbers, then we might be able to get more questions in for him during the time we have.

M. Lee: I appreciate that.

We’ve had some discussion in AG estimates over time, and I will note that the Attorney General has used the term “bending the curve.” Obviously, that’s meant a lot in our times now with the COVID-19 pandemic. But the bending the curve reference was to bend the curve from the 2016-2017 trend lines, as the Attorney General previously described, in terms of settle amounts, whether they’re realized or not.

This is a continuation question to my last question. Perhaps staff can assist with this as well. In terms of where the forecasts have been, we were previously discussing figures for forecasts being net claims incurred under the previous service plan at $6.437 billion, and the budgeted figure for the last period was $5.96 billion. Can I ask what the continued trend is here and what the projection is both for this budget going forward at the high-water mark, as the Attorney General just indicated, and whether that trend is now headed in the right direction, from the Attorney General’s perspective?

[4:20 p.m.]

Hon. D. Eby: I wonder if the member could provide a reference for the two numbers he quoted — the $6.436 billion and the $5.96 billion in terms of net claims incurred. The numbers we’re looking at in the service plan are slightly different from those, and I just want to get his source correct here.

M. Lee: I was referring to the previous service plan. That first figure was for 2018-2019, and the budget, presumably, was for 2019-2020 in terms of the second figure.

Hon. D. Eby: The service plan numbers, the actual for ’18-19, $6.5 billion — these are rounded numbers; for ’19-20, $5.76 billion; for ’20-21, $5.46 billion; for ’21-22, $4.26 billion. What the member can see in the trends of the net claims incurred is that we are bending the curve, in this sense — not in the COVID sense, although British Columbians have done a good job on that — in terms of net claims incurred.

It’s important to know, for the public — I know the member knows — what net claims incurred is. It’s the actual claims liability that ICBC incurs in a given year, plus or minus any adjustments for prior year claims.

[4:25 p.m.]

Sometimes claims are estimated, and they are estimated higher than the actual payout that is required or lower than the actual payout that is required, so there needs to be adjustments for prior years. So net claims incurred should also include that.

What the member should see from this transition from $6.5 billion to $4.26 billion is the impact of the RAAP changes as well as the enhanced care changes.

We’re still working on his other question.

M. Lee: Thank you for that response.

The Attorney General has explained what net claims incurred is. I just want to come to another related category. We’ve had the opportunity to talk about complex historical claims and what that has been assessed at and reassessed at by ICBC.

Could I ask the Attorney General: what does, again, the trend line or the progress that’s being made against complex historical claims look like in 2019-20 compared to 2018-2019? What is forecasted to come in 2020-21 and the following…?

Hon. D. Eby: We’re doing a bit of a leap frog here. I do want to get caught up with the member’s questions.

In terms of the impact of the settlement strategy to get more files closed and to reduce the escalation in average settlement claims, there has been some success in that, and we have some numbers to share with the member.

I’m going to give the member open and closed files and average settlement values. In fiscal 2018-19, there were 74,584 files opened and 61,272 files closed. Then in fiscal ’19-20, there were 66,279 files opened, and there were 64,677 files closed. The average settlement amount was, again, $45,000.

There’s an increase in the number of files that are being closed, and year over year, we have held the line on the average settlement. That is good because the increases were not sustainable. So some progress.

The Chair: The member for Vancouver-Langara.

Hon. D. Eby: Mr. Chair, I have just one more piece of answer to give to the member.

The Chair: Sorry. I’ll recognize the Attorney General again.

Hon. D. Eby: We just need a couple more minutes here, Mr. Chair.

[4:30 p.m.]

This is turning out to be a more complicated question in terms of the emergence of complex historical claims. If we could take this away and provide the member with a more complete answer…. I worry it’s holding up the whole show here.

M. Lee: We’d appreciate that response to follow.

If we could just go to…. We’ve had discussion, of course, on Bill 9 relating to the expected savings from the passage of the Evidence Amendment Act. Earlier in the process, in early March, when we were first going through committee, the Attorney General suggested that I ask that question during estimates in terms of cost savings.

I do acknowledge that we had subsequent discussions when we came back near the end of committee stage on that bill, but I still wanted to take this opportunity in budget estimates here with the Attorney General’s ministry to ask the question as to what the expected savings are from the implementation of the Evidence Amendment Act bill.

[4:35 p.m.]

Hon. D. Eby: There are two sources of uncertainty around the savings. I know we canvassed them to some degree in the committee stage around the enhanced care bill.

The two sources of uncertainty are judicial discretion around the number of experts. The second is the value of recoverable disbursements as a percentage of the claim as a whole, as well as the value of expert reports — the proportion of an expert report that is a recoverable disbursement.

I can advise the member that it was just this past week that I wrote to the Canadian Bar Association, the Trial Lawyers Association of B.C. and the Law Society to ask for their feedback on, specifically, the percentage of recoverable disbursements as a proportion of the value of an overall settlement amount or award in court and the appropriate value for the regulation in terms of recoverable disbursements for an individual expert report. I’m hopeful to hear back from all three of those organizations with their feedback within a month.

Their feedback will be assisting government in setting those values. Those values will provide us with a better idea about potential savings, but at this point, I can’t advise the member about any specific savings because those values, initially announced at $3,000 for an expert report and 5 percent of the overall value of the claim as recoverable disbursements…. Those numbers are the floor but may not be the ceiling, depending on the feedback we receive from these organizations and then in consultation with the judiciary.

M. Lee: Just making best use of the time that I have here. Thank you for that response.

The supplementary material that I was provided by your office, the ministry, coming out of AG estimates briefings in the middle of July, included some information relating to the increase in FTEs from 2019-20 to 2020-21, due to, as the Attorney General has mentioned, the addition of temporary staff to deal with enhanced care coverage initiatives and other unfulfilled vacancies across the organization.

The one area that I wanted to come back to the Attorney General about was that it states, as well, increased capacity of in-house legal counsel. Recognizing, again, the discussion we’re having about the parallel structures and processes that will be taking place over the next three to five years and possibly, for some claims, longer, what is the expectation and the projection in terms of FTEs on in-house legal counsel — first of all, in 2021, as compared with 2019-20, and then going forward through the next three-year period?

[4:40 p.m.]

Hon. D. Eby: I can advise the member that in 2018, ICBC did an analysis of their expenditure on legal counsel, internal versus external, to determine the most efficient way to hire lawyers in terms of resolving claims, up to and including going to court. The analysis suggested strongly that ICBC would be better off doing more legal work with in-house counsel, as opposed to external counsel.

Following those reforms, ICBC now does 20 percent of their legal work in-house and 80 percent of their legal work externally. The savings from this reform are in the millions of dollars. ICBC would need some time to get the exact number, for the member, of the savings realized by increasing in-house legal services and relying less on external contractors for this legal work, but I’ll get that number to the member, in terms of the projected savings of this reform.

M. Lee: Thank you for the follow-on information.

I wanted to turn to the civil resolution tribunal. I appreciate that just this week the Attorney General tabled, in the House, annual reports for 2017, 2018 and 2019.

Just looking at the annual report for April 1, 2019, to March 31, 2020, it states, at the back of one of the schedules, in terms of the breakdown of motor vehicle injury disputes, that the total number of new disputes in 2020 was 125. I know that — again, back in the material that I was provided in the middle of July through the Attorney General’s office — it did provide me an update to April 30, 2020. That number was 139 injury disputes.

Could I ask the Attorney General: at least for the period of April 1, 2019, to March 31, 2020, what were the savings to ICBC as a result of these disputed claims being dealt with through the CRT?

[4:45 p.m.]

Hon. D. Eby: I want to note that there are a couple of reasons for the transition to the CRT. Certainly, it is a reduced-overhead process that provides some savings in terms of dispute resolution. But it’s also meant to be more efficient and timely for resolving disputes, for claimants, than court processes. It wasn’t exclusively a money-saving initiative.

It’s very difficult, if not impossible, I’m advised, for ICBC to ascribe savings to that specific aspect of the RAAP reform. However, I can tell the member that ICBC attributes the decline in the incurred claim costs — from 2018-19 of $6.5 billion to 2019-20 of $5.76 billion — to the effect of the changes under RAAP, of which the civil resolution tribunal was one piece. It’s just too nuanced, in terms of all of the changes that were made in the system, to attribute any particular number, for these savings, related to these 139 injury disputes.

M. Lee: I appreciate the response and the reference back to the decrease, which we talked about earlier, of $6.5 billion to $5.76 billion — which, I think, is consistent with the Attorney General’s reference in the past, and even in the various bill debates, about the savings to ICBC based on product reform to date. That is closer to about $740 million.

Is this what the Attorney General refers to when he refers to the $1 billion of savings that had occurred with minor injury and CRT?

Hon. D. Eby: Yes, it is part of it. That $700 million difference in incurred claims is part of what I was talking about in the $1 billion in savings.

The other piece of it is that it’s not just the difference year over year but also that, without those changes, there was a projected and significant increase to the $6.5 billion. The $1 billion is actually the difference between the projection from ’19-20, without any changes, and the projection, with the changes, of $5.7 billion.

[4:50 p.m.]

M. Lee: I appreciate that clarification. It underlines, of course, the discussion of the numbers that the Attorney General has provided in the past from a forecast point of view.

Before I go further on that point, in terms of the $700-plus million of savings from this product reform…. I appreciate the previous response from the Attorney General about the challenge with ascribing savings to the CRT change, but percentage-wise, could the Attorney General provide some indication as to the order of magnitude of the savings from the putting in place of the CRT and having disputes run through that?

Hon. D. Eby: When we initially made the announcement about the savings, we attributed about half of the savings to the CRT reform and half to the minor injury. So about $500 million.

The challenge to ascribing a specific percentage of the actual $1 billion that was realized, in terms of savings…. ICBC is quite comfortable with that being the number that was actually saved over where we were headed. To put a percentage of that $1 billion, “Okay, this was the CRT; this was the minor injury definition,” and so on…. They have an overlapping and compounding effect on each other. So you can’t really remove the effect from one to another, in terms of coming up with a “scientific” definition of which percentage was due to the CRT and so on, because the changes are mutually reinforcing and result in the savings working together.

The back of the envelope work that we did on the announcement, in terms of the CRT, was about 50 percent of the savings. But again, the member should not take that as being…. That 50 percent of the $1 billion that actually was saved was due to the CRT, because it’s really due to the layering effect of multiple reforms at the same time.

M. Lee: I certainly appreciate the response from the Attorney General and the basic breakdown in terms of that projection. I just wanted to come back to another point.

When the Attorney General spoke about the $6.5 billion figure and the fact that the additional, what would be an order of magnitude of $300 million worth of additional savings if these product reforms didn’t come into place…. Could the Attorney General just elaborate on where that cost would have come from for the additional what is, in effect, I understand, to be about $300 million of projected costs?

Hon. D. Eby: Without the changes, we would’ve been subject to the same pressures that led to the changes themselves — the increasing litigation costs, the increasing awards, dramatically escalating pain and suffering awards for more minor injuries. They would have continued unchecked.

[4:55 p.m.]

That is where the additional $300 million comes from. It was the existing trends that led to the reforms, the motivation for implementing the reforms in the first place.

M. Lee: I certainly acknowledge the Attorney General’s previous response that there is a linkage, certainly, between minor injury and the CRT.

I wanted to come back to that, though, in terms of our previous discussions around the forecast and the CRT. I earlier cited what was presented in the Legislative Assembly and the reports on this. I know that when we had discussions back in May of 2019, post the effective date of the CRT, at least for minor injury, at that point the Attorney General acknowledged that there had been only one disputed claim that had been administered by the CRT.

When I asked the question in terms of what the expectations are around the number of claims that would be dealt with by the civil resolution tribunal for the fiscal year — that being April 1, 2019, to March 31, 2020 — the Attorney General indicated at first there was some discussion around ICBC looking at the categories of jurisdiction for the CRT, the number of claims and their estimates, and about 25,000 claims should be falling in this fiscal year under the jurisdiction of the civil resolution tribunal. We talked about 37,000 anticipated exposures, which is for one individual. There may be multiple people in one claim.

That was the first set of numbers that was provided in estimates. When we had some further discussion about that, the Attorney General did refine his response, and the modelling, as he stated back on May 28, 2019, is that there will be about 10,000 claims in the civil resolution tribunal for this fiscal year, despite the appearance of a very slow start of one claim. So about 10,000 should be underway this fiscal year.

I’d like to ask what the difference is here. Where did the forecast, which was at 10,000 claims, end up with an actual of 125?

Hon. D. Eby: There are two perspectives, one the optimistic perspective and one the less optimistic perspective. I suspect the truth is somewhere in between.

The optimistic perspective is one that is based in some significant policy reforms, and that’s if the system is just working. There’s easier access to care. The full cost of care is covered. There’s expanded access to different kinds of treatments that previously weren’t covered. So that significantly reduces friction and the likelihood of a claim, because the expenses that you have are covered.

[5:00 p.m.]

The cost is covered in full, and you don’t run up against someone saying: “Sorry. We don’t cover counselling for you, even though you’ve been through a traumatic accident.”

The optimistic perspective is everybody is getting what they need, so they’re less likely to end up disputing because there’s just nothing to dispute. The sort of glass-half-empty perspective is that there is a two-year limitation period. There may be a significant number of individuals who are watching the Trial Lawyers Association challenge various aspects of our reforms in court, and they may just be waiting to make a claim for a more auspicious period for higher damages, if the various challenges are successful.

I suspect the truth is somewhere in between those things, that friction has been significantly reduced, that the system is, in fact, working and people are getting what they need. But I also suspect there are a fairly significant number of claims that are waiting for the two-year limitation period and sincerely hoping that the reforms that we’ve made are overturned by one court or another at some point. Or they are waiting to see what their injuries turn into over a longer period of time before completing a claim. Hard to say.

It’s all speculative, but I think it’s safe to say we were all pleasantly surprised that the disputes did not manifest in the way that they did under the older system. I think at least some of it — and a significant part of it — is due to the reforms around the availability of care.

M. Lee: I acknowledge the prospect, in terms of minor injury and some of the other reforms that IC has brought about, that that may well be consistent with the Attorney General’s response for at least part of it.

I wanted to come back, though, to the CRT. I know that in our previous discussions over the length of some years here that the premise was, of course — and the Attorney General just acknowledged this a little previously — that disputes that go to the Civil Resolution Tribunal, and therefore not the court system for this province, will result in more expeditious, efficient processing through disputes. I recognize that even with the existing 125 — or now 139, at the end of April — there is certainly some sorting through of those decisions, even though, when I looked at the material, none of the decisions relate to any disputes around minor injury determination or the payment of amounts.

Setting that point aside, when the Attorney General referred to the order of magnitude of savings for the CRT as being $500 million, and even if we take it as several hundred million…. Could I ask the Attorney General: what is that breakdown in terms of the nature of those savings expected? I appreciate the interaction with minor injury, but just if I could ask the Attorney General: what is the actual savings description from the CRT coming in place?

[5:05 p.m.]

Hon. D. Eby: The biggest saving that we were anticipating seeing from moving to the CRT system from the B.C. Supreme Court for more minor injuries is in relation to avoided legal costs, costs associated with expert reports, disbursements, defense lawyers, filing fees and charges.

As the member rightly noted, we were previously expecting a filing of 25,000 claims, 30,000 individuals — even, in more conservative estimates, as we started to see the trends emerge, 10,000. These are all B.C. Supreme Court filings and associated expenses that were avoided by using the CRT system.

The unexpected piece that the member has noted is how few of these have actually gone to the CRT, including around the definition of minor injury, likely due to the bright-line nature of the definition. So people are either going to qualify or they’re not. There’s not a lot of area for dispute.

M. Lee: Just to ask, then…. In terms of the CRT itself, in 2019-2020, it’s been stated that 55 staff members were dedicated to automobile collision disputes. This was in a conversation that we have been having around the capacity of the civil resolution tribunal in the build up, and there may well, of course, be further capacity through the reforms under Bill 9 and Bill 11 as ICBC goes forward.

I wanted to ask: given the fact that there were over 9,000 less disputes going through the CRT than originally forecast, what was the dedication of the staff at the CRT doing over this past fiscal year?

Hon. D. Eby: Yes, I can tell the member that as a result of the lower numbers than we expected, hiring is frozen at the CRT.

It’s quite a delicate balance, and certainly, I have some nervousness that there may be a significant number of claims waiting to show up. There’s a six-month training window for new civil resolution tribunal members. If we saw a sudden acceleration in claims, it would take us about six months to respond with additional staff members to be able to resolve those. The goal is to provide people with quick and efficient resolution of their dispute. So we’re really trying to balance that.

The additional staff members who were brought on have not gone to waste. They’ve been working on small claims and strata-related disputes. I can also advise the member that there have been about 8,000 uses of what’s called the Solutions Explorer, which is an artificial intelligence–type process that people go through with their dispute to determine how to approach their claim and to assist them in understanding if they do, in fact, have a claim.

It’s likely that this, working in partnership with ICBC’s reforms, has helped people understand better ways to resolve their disputes or equip them to resolve their disputes directly with ICBC and not have to rely on the CRT, but based on information they did get from the CRT.

[5:10 p.m.]

M. Lee: As the Attorney General has indicated to my colleagues during estimates debates here, there is an expectation that government will be filing with the BCUC, in December, their rate application.

This, of course, stems from the order-in-council on February 6 that was passed that stated that the corporation was exempt from having to apply for a general rate change order for the 2020 policy year by — what would have been the case — February 16, 2020 and also file with the commission the reports required to be filed by the corporation, including around performance statistics and the like.

This is the transparency, both from a regulatory oversight point of view for the province as well as financially, that would’ve been expected that the corporation would adhere to.

Can I ask the Attorney General what the reason was behind government’s decision to delay the filing with the BCUC?

Hon. D. Eby: We had to make a decision around resources in relation to ICBC. It’s a question of capacity.

The same team that prepares B.C. Utilities Commission submissions…. They’re quite involved actuarial reports that are provided to the commission. The commission makes significant information requests — ICBC and back and forth. It’s quite an extended process. That same team is the team that’s implementing the enhanced care transformation at ICBC.

In the context of a zero percent rate increase for the year, government made the decision that it was better to have the team focus on the implementation of enhanced care and the savings that can be realized from that than it was to confirm that a zero percent rate was what was actuarily indicated for the period.

M. Lee: Thank you for that response. I would have thought, in the context of the fundamental change that is happening under Bill 9 and Bill 11, and I certainly have spoken to this in my second reading speech as well, that there would’ve been the necessary and required regulatory oversight to look at all of the financial information and the actuarial assumptions that have been part of this government’s record for the last three years.

In the absence of that — and recognizing the constraints that the Attorney General just provided and also the various challenges to ICBC that my colleagues have raised, including in terms of its investment strategy and the loss carried forward at $700 million — does the Attorney General feel or believe that he has the required understanding of ICBC’s current financial situation in order to move forward and continue to move forward with the fundamental changes that this government is making?

[5:15 p.m.]

Hon. D. Eby: The member can and should take comfort from the fact that government has committed to transparency around the enhanced care program at ICBC.

That is why, in December, there will be a full Utilities Commission review of all of ICBC’s work — their assumptions, projections, the numbers related to the enhanced care program, which will necessarily include the impacts of the RAAP program as well. There will be a full accounting of all of those things and a full airing for the public of those pieces.

The member insists on calling the underwriting difference of $700 million a loss when it is clearly not a loss. There are three years of projected net positive revenue years for ICBC. If I look at the previous governments three-year projection and apply the same criteria, their “projected loss” was $1.4 billion. And even then, they were projecting a $300 million bottom-line loss at ICBC. So we’re at least 50 percent better than the previous government’s record in terms of that underwriting number and also better in terms of the revenue at ICBC.

It’s an unusual number to use, given the previous government’s record and given how the insurance industry works. But in any event, I wanted to point out that, obviously, things have changed in terms of how the corporation is running.

M. Lee: Well, I’ll just say that in the three years of AG estimates that we’ve had with each other, we saw, certainly in 2017-2018, there was a directive rate hearing to the BCUC. This year there was a deferred rate hearing.

This is at a time where ICBC and this government are changing, fundamentally, the operating model on the basis that there’s financial loss and considerations on projected loss. We just went through various projections and models, and clearly, even when you take the example of the CRT, it’s vastly different from how this government originally forecasted that when it brought that forward.

I just want to ask a question. Relating to brokers and the continued transition to online availability of insurance renewals and the like, what is the expected impact in terms of commissions payable to brokers in respect of their commissions?

Hon. D. Eby: Just in terms of the member’s preliminary comments, there are no projected losses. I don’t know why he keeps saying that there are projected losses at ICBC. There are not. The numbers are vastly different. But the good news is that the numbers are better than we projected. The whole point of…. The projections that we’re making are deeply conservative for exactly this reason.

[5:20 p.m.]

If we’re erring on one side, it’s to be conservative. To assume that people will be going to the CRT as often as they went to B.C. Supreme Court was an assumption that we made to be very conservative, even knowing that more was being paid out in terms of access to the different types of benefits. We could’ve projected lower numbers but did not do so.

The savings from our first round of reforms are as projected. So we do have a track record of actually delivering the savings from the reforms as projected, and I see no reason why this second project would be different. It is currently on time and on budget.

With respect to online renewals, which was the member’s question after his other comments, the commissions for online renewals will be determined once the process is established and finalized. We’re still working with brokers to determine what that process will look like.

I’ve made it clear that I do not wish for ICBC to take on the work of establishing additional call centres and online departments. My preference would be for the brokers to be doing that work, for that to be external to ICBC. That conversation is taking place, and the commissions will be dependent on the process that’s established for those online renewals.

M. Lee: Within the time that I have, I wanted to turn now to the…. These are just questions on the justice side at this point. So those who are with the Attorney General on the ICBC side can now depart, if they’d like.

This question relates to the court digital transformation strategy that’s in place for a five-year period starting in 2019. Just referring to appendix 1, in terms of the court digital transformation road map, I appreciate that in terms of COVID-19, there’s been certainly a combined effort between the Ministry of Attorney General, the chief justices of our courts, the legal community and others in the Ministry of Attorney General in terms of the efforts made to continue to modernize our judicial system through the use of technology, whether it’s video conferencing or electronic filings and the like.

In terms of the progress that is being made on the original plan, some of which may have been accelerated by COVID-19 in the last period, coming on to four months now, can I ask what the expected budget is to implement this strategy, including in year 2 of this plan?

[5:25 p.m.]

Hon. D. Eby: Government has funded an initial traunch of funding of $2 million for technical improvements to video conferencing, conference phones for court rooms, upgraded Wi-Fi across correctional centres and in courts, dedicated phone lines for courts and additional upgrades to laptops for various actors in the system, as an example, so they can access systems like Microsoft Teams and have things work for them when they turn their computers on.

That is an initial traunch of funding. The understanding the government has is that we’ll need to continue this conversation, and we are, with the judiciary in terms of accelerating the digital road map. One of the areas that we’re involved in conversations around is in relation to digital document management. I’ve described our conversations as supercharging, essentially, the digital transformation strategy.

We don’t do it alone. The courts are an independent branch of government. So we’re working closely with the Court of Appeal, the B.C. Supreme Court and the Provincial Court on this strategy and appropriate investments to facilitate public health restrictions but also to lay a foundation for the justice system to address some long-standing concerns of many people.

The digital strategy remains our road map to do that. The first traunch of funding, as I said, is $2 million. Conversations are continuing with the judiciary about appropriate additional investments. I don’t have numbers for the member yet.

M. Lee: Certainly, I appreciate the response, recognizing the importance of the digital strategy over the next five years and ensuring that the resources are available to move this forward. We’ve seen the importance of it. When we have COVID-19, we don’t have the ability, as a province, to keep our courts open fully, only for urgent matters and certain matters, as we saw. So it’s fundamentally important that the strategy is moved forward with.

In that vein, I’d just like to ask…. This dates back a bit, to the end of April, when the Chief Justice of the Supreme Court of British Columbia issued a statement that indicated the importance, certainly, and the shifts and the challenges for the courts with COVID-19.

The chief justice made a statement at the end of the third paragraph: “COVID-19 has certainly highlighted the urgent and pressing need to compress that timeline.” This is the timeline, at the time when he is making reference to this digital strategy for the courts, of three to four years for full adoption. He goes on further to say: “To date, however, requests for the financial investments necessary to make the strategy a reality have gone unanswered.”

Has there been a different answer, at this point in time, from the government in terms of moving forward with the necessary financial investments for the digital strategy?

Hon. D. Eby: I can advise the member that we have progressed significantly in our conversations with the court since that correspondence was issued. We are very engaged in work with them around identifying what technological responses will address their primary needs in delivering services to British Columbians, even in a second wave. That is the focus of court services branch work and the Ministry of Attorney General policy staff work, to focus on meeting the court’s needs.

The chief of the Supreme Court, Chief Justice Hinkson, did write that and did have those concerns. I think that we are moving to address them.

We’ve also been working very closely with Chief Judge Gillespie and with Chief Justice Bauman of the Provincial Court and Court of Appeal, respectively. The Court of Appeal has no COVID-related backlog because of their rapid deployment of Zoom and the nature of their caseload and hearing process. So that’s very good news. On the Provincial Court side, we have retired judges returning from service to assist with the backlog as well as the appointment of new judges, and off-site traffic court at post-secondary institutions across the province — responses like that to assist us in responding to COVID.

[5:30 p.m.]

Some is technology, and some is just brute force to deal with as much of the backlog as possible.

M. Lee: Maybe this will be something that we come back to in future discussions. Certainly, I also share the recognition of the Attorney General to all three chief justices — Gillespie, Bauman and Hinkson — as well as the leadership team within the ministry and court services and justice services, in terms of all the work that’s been done to progress the modernization here. I look forward to future updates and reports on that.

With the remaining time that I have here, I wanted to turn to the Lobbyists Transparency Act and recognize the importance and the assistance…. There was a further transitional period, in terms of the implementation and the filing requirements, recognizing, of course, during the COVID-19 epidemic, as well, to go beyond the original June 15 deadline to, now, September 15, 2020.

Having said that, certainly I’ve heard, alongside my colleagues in our caucus, continued concerns, as the Attorney General may have also heard directly, from various organizations, including chambers of commerce and boards of trade, relating to the administrative effort and cost to have to deal with the new requirements under the Lobbyists Transparency Act.

Has the government considered any adjustments to those requirements in order to reduce what has been a real challenge for some of these public-serving organizations to deal with — the administrative burden of the reporting mechanism that’s in place under the act?

Hon. D. Eby: Recognizing the uniqueness of this time, and despite government’s goals around transparency, we believe that people deserve to know who is influencing or attempting to influence government decisions around policy.

The member is right. We did delay full implementation to September of 2020. This has given a number of organizations time to actually talk to the commissioner, the registrar for the act, and to understand that there is actually a very limited regulatory burden here for the public benefit that comes with transparency around how government makes decisions.

With that said, the commissioner has advised, on the record, several times and been quite public about the registrar’s interest in education over enforcement, given the unusual circumstances of this time and the hope that any organization that’s concerned about compliance or wondering about what their obligations are will just reach out to the registrar.

For those organizations that have, I think they’ve found the registrar to be incredibly helpful in understanding the limited obligations compared to, as I said, the benefits, as I’m sure the opposition would agree, in knowing who’s trying to influence government’s decisions and in what way.

M. Lee: Just a brief comment. Thank you to the Attorney General and the team for answering my questions, along with the other colleagues.

I did jump the gun a little. I think the Attorney General and his team knows this. In terms of the Greens, the Third Party, they do have a time at six o’clock, and they do wish to talk and ask questions, both ICBC and justice. So perhaps the ICBC team can come back online.

I’m just going to now ask the Chair if he could invite the member for Kamloops–North Thompson to ask questions.

The Chair: Thank you, Member.

I recognize the member for Kamloops–North Thompson.

[5:35 p.m.]

P. Milobar: Thanks for all the information I’ve been listening to today from the Attorney General and others.

To the Attorney General, we have a situation in my riding, in Blue River. I’m hoping he’s aware of it. I canvassed the Indigenous Relations Minister in estimates. I’ve watched with interest some of the Premier’s comments in local media around it. What it is, is a two-year protest up in Blue River. It’s been in Blue River for two years plus now. It moved up from the North Thompson. They’re protesting the Trans Mountain pipeline.

Essentially, the community is wondering why there is no governmental dialogue, why there is no apparent government enforcement, no action whatsoever being taken from the government. Now, the Premier’s response is: “Well, phone the police, or talk to the area Chief and let the area Chief deal with it.” The area Chief wants the government to get involved and actually take a meaningful role.

I recognize that it’s the Indigenous Relations Minister who would be in charge of those types of discussions. Unfortunately, he’s been silent for two years. I understand that the Solicitor General is responsible for policing, and I will certainly be discussing this further with him, as I have over the last two years.

Part of the problem, and this is where the community’s frustration of “just phone the police….” Frankly, even the protesters are frustrated with some interactions they’ve had trying to get the police to take action in the area, as well. There seems to be an unwillingness….

You have local police doing their best. The detachment is in Clearwater, so it’s an hour or an hour and a half south of Blue River. It appears that every time there are any potential charges advanced to the Crown, the Crown refuses to take anything any further. So what we have is a community frustrated — a community whose advice from the Premier is: “Phone the police.” And the police are getting frustrated because they can’t advance anything with the Crown.

I guess the question to the Attorney General is…. It’s very specific around the Crown. As I say, I fully understand that there are those other jurisdictions and responsibilities from other ministers. But why is the Crown so reluctant?

The feeling in the Blue River area is that this is a pipeline that they all support. The government has vowed to use every tool in the toolbox not to see the pipeline go forward. Then they see the resources being spent with the Wet’suwet’en issue and Nathan Cullen, a former NDP MP, getting paid $2,000 a day to try to have dialogue and discussion between the various factions of disagreement, and they get complete silence, not just from every other part of government but from the Crown as well.

Can the Attorney General explain why the Crown would be so hesitant? I’m not saying just to strictly target protesters. I’m saying to make sure any potential charges in the area, be it people taking liberties with the protesters or otherwise…. Why is the Crown sitting on their hands, essentially, and not advancing any charges that are being recommended by local law enforcement?

Hon. D. Eby: I am aware of the situation. I actually got a letter from Amnesty International today expressing concern about this situation.

The member will know, obviously, that neither the Ministry of Attorney General nor the Minister for Public Safety direct the police. So that’s not an option, which is likely why he didn’t suggest that it was. But someone watching may not be aware that that’s the case.

[5:40 p.m.]

Typically, when there are two private parties, including a situation of protest, it’s considered a civil dispute by police, and typically, the party that wants access to the property will start a civil process and seek an injunction for removal. Without knowing all the circumstances of this particular dispute or what’s happening in terms of civil strategy, and given the significant likelihood that it will end up in front of the courts, as Attorney General, I’m very reluctant to comment on any of that.

What I can tell the member is that I am not aware of any recommendations to Crown counsel from the police in relation to charges coming out of this area. There is a civil disobedience team and an injunction team within Crown counsel office as well as a process where sensitive matters like this are escalated. There haven’t been reports. I can just advise the member that Crown counsel who are on the call are not aware of any reports to Crown counsel, recommendations or charges.

If the member does have specific situations where charges were recommended — and we’ll go back and have a look as well — he’s certainly welcome to bring them to the attention of my office. Usually there’s little I can say about those, but I can assure the member that I would have a look and make sure that our Crown counsel are reviewing those, having a look and providing feedback to police if there is a reason why charges are not being approved.

P. Milobar: Well, this comes to the root, I think, of the frustrations up in the valley. The letter that was sent by the area director referenced, and a lot of the community have referenced, three protesters in front of the Premier’s house. I certainly do not advocate or suggest that that is appropriate in the least. That should have never happened. However, they see, three months later, charges being laid.

They’ve been dealing for two years with protesters on Crown land and the Crown unwilling to do anything. The Crown, at the same time, is engaging a former NDP MLA at $2,000 a day on a pipeline that the Crown would like to see move forward. The advice from the Attorney General around civil action is exactly the problem the community is facing.

It is on government space that the protest is happening. It’s impacting businesses. It’s impacting the private campground right next door. They do not have the resources to try go through the Supreme Court process to start getting injunctions and everything else to try to get into this. Every time they’ve been told, for two years, “Just phone the police, start files, and we will handle it through channels in the back,” in terms of governmental process and legal process. They’ve been doing that. Phone call upon phone call.

Now, here we are, two years down the road. The Premier’s advice is still to phone the cops or get the local chief to deal with it. “It’s their responsibility, not ours.” Now the Attorney General is saying it’s a civil matter. The community wants to be treated like every other community in this province gets treated, and they’re not feeling that.

I guess my ask of the Attorney General is to meaningfully get the justice side of this equation engaged with the policing side of this equation, engaged with the Indigenous Relations side of this equation so there can actually be some meaningful discussion happening in that community for all sides and so that there can be some sort of resolution to this. Simply shrugging the shoulders of government and saying, “Well, community, you deal with it, because you’re 400 or 300 kilometres north of Kamloops,” is not acceptable. They need to see some real, meaningful commitment from the government.

You cannot pat yourselves on the back about UNDRIP all the time and then walk away when there is actually conflict. There is real conflict in this community. The community is worried. The protesters are worried. No one wants to see any violence. No one wants to see any aggression. But pressures are mounting. It’s time for the government to step in and put proper resources into the problem through the Attorney General office, through the Solicitor General’s office, through the Indigenous Relations office and try to make this situation move forward in some way or fashion.

Hopefully the minister, today, can commit that there will actually be some sort of resources from his ministry put to this problem that he has said he is somewhat aware of. Hopefully people within his staff are very aware of this situation, and we’ll see some proper resolution moving forward for the tax-paying residents of Blue River, who want to be treated like every other tax-paying resident in British Columbia is.

Hon. D. Eby: I did point out that private parties typically use a civil injunction. The member referenced the Wet’suwet’en matter. The member will know that there was an injunction sought by the pipeline company in that case.

[5:45 p.m.]

I do understand that the member is comparing a number of different situations and saying that the community wants a certain thing. I accept that. I don’t know the community of Blue River and its particular perspectives on this, but what I can tell him is that, with respect to the Wet’suwet’en process, from a legal perspective, there was a civil injunction sought and then contempt proceedings related to that. So it was a different situation.

I advise the member that I don’t direct police. Maybe I wasn’t specific enough. Certainly, if there is illegal activity happening, people should be reporting it to the police. And criminal avenues are available.

The Premier was right. If the police are not responding in the way that the community believes that the police should be responding, they have an avenue for complaint, depending on whether it’s the RCMP or the municipal force. In this case, I believe it’s the RCMP. It would be the Commission for Public Complaints against the RCMP to file complaints related to police conduct. But it’s not up to me and it’s not up to the Solicitor General to direct the police to enforce the law in any particular way.

As far as Crown counsel, which is also an independent branch, they need to receive from the police a report to Crown counsel recommending charges, which they then evaluate against their policies in terms of proceeding. If they don’t receive that report to Crown counsel…. They are not an investigative body. They don’t go out and do those kinds of investigations to then have charges be brought, and neither do I as the Attorney General.

Obviously, I’m sure it is frustrating — it sounds like — to people in the protest camp and people in the community. Certainly, from the perspective of Amnesty International, there is concern about safety in relation to the protest camp. Public safety is squarely within police responsibility. Although I’m sure the member understands that, I do want his constituents to understand that I don’t and can’t — for good reason — direct the police to get involved here. That is a police operational decision.

J. Thornthwaite: I have a question about sexual assault policy in the law. I did ask a similar question last year, but I’ve got some more information for the minister.

I have in front of me right now a letter that was written to the Minister of Justice and Attorney General of Canada. It’s the mandate letter from the Prime Minister dated December 13, 2019.

In this mandate letter, he has said…. I’m only going to read you the part pertaining to the sexual assault policy. “I will expect you to work with your colleagues and through established legislative, regulatory and cabinet processes to deliver on your top priorities. In particular, you will ensure mandatory training for judges in Canada on sexual assault law, including myths and stereotypes about victims and effects of trauma on victims’ memory, and on unconscious bias and cultural competency.”

My question to the minister is twofold. First off, will the minister be bringing forth a similar law or requirement for judges and lawyers to have mandatory sexual assault education on policies with regards to the law? And if not, will the minister do what the law society is recommending — that we get rid of what they call a preliminary inquiry to make life easier for victims? Apparently, according to the law society, the preliminary inquiry is quite robust and not necessary with regards to helping make things easier for those victims who are, tragically, sexually assaulted in British Columbia.

[5:50 p.m.]

Hon. D. Eby: There are a number of aspects of federal responsibility. I know the member is aware, in her question, in terms of the Criminal Code requirements for preliminary inquiries, the training for B.C. Supreme Court judges and so on. I want to respond to her question, because I know she was aiming it at provincial areas of accountability.

With respect to provincial areas of responsibility, I’m glad to advise the member that we have been doing a lot of work in our independent Crown counsel branch with respect to training around sexual assault, so that Crown counsel are adequately prepared to support victims who come forward. It was to be the theme of this year’s Crown counsel conference, which was supposed to be an in-person conference but then moved to virtual, and it was a main focus of the virtual conference as well, although not to the degree that was originally planned for the in-person. It was a bit hamstrung by COVID.

There have been additional individual and team trainings for Crown counsel and specialty counsel in relation to sexual assault and Crown counsel in relation to sexual assault allegations that are being tested in court. The second piece is that, despite the fact that the federal Criminal Code does require preliminary inquiries, our Crown counsel policy does recognize exactly the issue that the member has properly raised, which is that, in many cases, it is in the public interest to avoid a preliminary inquiry and, instead, to go to what is called a direct indictment, which is the direct hearing, avoiding the preliminary inquiry.

In the policy, a specific and a major factor is that Crown counsel should be preceding by direct indictment where there is a potential for harm to a victim or a witness of multiple proceedings, having to tell their story over and over again. That is used regularly by our Crown counsel to avoid preliminary inquiries in relation to sexual assault charges that have been laid and a trial that’s going to go ahead to avoid a victim having to tell her or his story multiple times.

There is some good work happening in our Crown counsel offices. The member raised the federal initiative around Supreme Court judges. We’re watching that with interest. We think there are some fairly significant constitutional challenges that the federal government…. That may have — I don’t know — delayed implementation of this.

With that said, I have discussed this very topic with Chief Judge Gillespie of our Provincial Court, and I know that she is highly engaged on this in ensuring that the judges of her court are fully prepared and trained for the job that they’re asked to do, including hearing sexual assault trials. She has engaged in providing that support to her judges. I would encourage the member, actually, to consider reaching out to Chief Judge Gillespie. I can put her in touch with Chief Judge Gillespie to discuss some of those initiatives that are taking place in the Provincial Court.

M. Lee: I know and recognize that during the course of COVID-19, we continue to enable and want to support legal aid lawyers who are working through this period. There has been some consideration, as I understand it, with LSS in regarding looking at the tariff in recognition of legal aid lawyers in terms of the kind of work they do — which is of a preliminary nature, before going to trial — in terms of the compensation, timing and scheme.

[5:55 p.m.]

Could I ask the Attorney General if he can give me an update as to where any of those discussions might be taking place and what next steps are in terms of reviewing the tariff?

Hon. D. Eby: Recognizing that legal aid lawyers are among, even after our tariff reforms, some of the lowest-paid actors in the justice system and that they are vitally important to our criminal justice system, government supported Legal Aid B.C. in establishing a $700,000 fund for these lawyers who, essentially, saw their income disappear over the period of the COVID restrictions on in-person appearances in courts in the province as one COVID-related initiative.

As a second, Legal Aid B.C. also adjusted their tariff to recognize that courts were moving to extensive pretrial conferences. These are far more detailed and extensive pretrial conferences than were taking place in the pre-COVID period to try to divert matters out of court and narrow issues so that hearings take up less time. The tariff was adjusted to provide support for legal aid lawyers to be able to do and participate on behalf of their clients in these pretrial conferences.

I can advise the member that we are currently in discussions with Legal Aid B.C. in relation to potential tariffs in supporting clients to access online hearings as well as providing technology support for legal aid lawyers, like we have for judges and Crown counsel, to be able to access virtual hearings so that they have the technology needed to support their clients.

It’s ongoing work. There have been some changes made to provide support to these lawyers, but it is ongoing.

M. Lee: Again, I’ll just take this quick opportunity before turning it over to members of the Third Party for their questions just to say, once again, thank you to the Attorney General and his team for answering all of the questions that we were able to ask in the time that we had. In terms of my colleagues, in particular, from Richmond-Steveston and Richmond-Queensborough, thanks very much for the assistance and the responses.

To the Attorney General, in terms of further information that the team wasn’t able to provide in the time that we had, I look forward to receiving that follow-on after this estimates process. Thank you.

S. Furstenau: Delighted to be here to ask a few questions of the Attorney General at this time. I’m just going to jump right in to the new care-based model for ICBC. I just have some specific questions I just wanted to get on record and some understanding about.

[6:00 p.m.]

Can the minister explain which benefits are available to people under the current system and how they will be treated under the care-based model (1) if a driver receives substantial but not catastrophic injuries in a single-car accident, so hits black ice or hits a tree; or (2) receives a minor injury from a crash with another driver and is not at fault in that crash; and (3), which is the one that I think is of most concern and interest to us, a cyclist or a pedestrian has catastrophic injuries from being hit by a driver?

Hon. D. Eby: Thank you to the member for the question.

In the first scenario, you’ve got a driver who receives substantial but not catastrophic injuries, in a single-car accident, hitting black ice or a tree. There’s not a difference between benefits depending on whether an accident is deemed catastrophic or substantial, necessarily. I understand what the member is saying, so I think I can provide some insight here.

In the current scenario, this is a one-car collision. Our system is built around having somebody to sue. You can’t sue the tree, which means that you move into a different section of the compensation system, called part 7. The maximum limit of your part 7 benefits for a one-car collision is $150,000 before April 1, 2019. So if you had the ill fortune to have this accident before April 1 of 2019, you’d be limited to $150,000 in benefits and a maximum of $300 a week for wage loss.

If you had the accident after April 1, 2019, we doubled that benefit to $300,000 for medical and rehabilitation benefits and a maximum of $740 per week for wage-loss benefits. It’s a significant improvement, but not enough to cover the needs of most people who are involved in a collision like this.

Under enhanced care, the injured customer would have available to them up to $7½ million in medical and rehabilitation benefits, up to $160,000 in permanent impairment benefit — the one exception to what I said, which could be up to $250,000 if it falls into the category of catastrophic injury; $1.2 million as an additional transitional benefit, if they need it; and a maximum of $1,200 per week in wage-loss benefits. That $1,200 wage-loss benefit covers the wages of about 90 percent of British Columbians, and those who are in that 10 percent that earn more than that can buy additional optional coverage to have further wage-loss coverage.

In the member’s second scenario, you have a minor injury. This is a defined statutory term, so that is a very significant designation. I’ll be using the situation of someone who falls into that category of the defined statutory term of “minor injury,” from a crash with another driver and is not at fault from the crash. Under the current situation, following our reforms from last year, the pain and suffering entitlement for that person would be limited to $5,500. They could sue the at-fault driver, but again, there would be that limit of $5,500 for the pain and suffering award.

They would be able to receive accident benefits from ICBC, but those would be subtracted from their claim against the at-fault driver. So the actual award in a lawsuit against the at-fault driver would likely be very small above the entitlement of about $300,000 for medical and rehabilitation benefits, if at all, and $740 per week for wage-loss benefits. In short, a limit of $5,500 for pain and suffering, $740 per week for wage-loss benefits and $300,000 for medical and rehabilitation benefits.

Under enhanced care, again, it’s the $7½ million for medical and rehabilitation needs and up to $1,200 per week for wage loss. They would have access, certainly, to all the care coverage they need to recover from their injury, but it’s important to note that a person with a minor injury and a tort claim may receive slightly less in financial compensation under enhanced care than they do in the current model, but would have access to all the care coverage that they need to recover.

For category 3, this is a cyclist or pedestrian who has catastrophic injuries from being hit by a driver. This is the one that the member underlines as particularly important to the concerns that she’s heard. Under the current system, the customer would be entitled to part 7 benefits from ICBC up to $300,000 for medical and rehabilitation benefits and $740 per week for wage-loss benefits, but they would also be able to sue the driver that hit them.

[6:05 p.m.]

Practically, the way it works out is that typically, the funds in a tort claim are limited by the amount of insurance that’s held by the at-fault driver. If you have $1 million in insurance, or if you have $2 million in insurance, or if you have $500,000 in insurance, that is the limit that can be recovered in the vast majority of cases — where the person has limited other additional assets.

In the scenario of someone with $2 million in insurance coverage, when you take off the 30 percent contingency fee, which is the average in the province, for the lawyer representing the injured cyclist or pedestrian, that leaves $1.4 million available in a one-time payment to cover this person’s expenses over the course of their lifetime — all of their care needs. If they need a wheelchair or a power-assist wheelchair or retrofits of their home, that is the limit: $1.4 million.

Under the new enhanced care model, the injured customer would be entitled to receive up to at least $7.5 million in medical rehabilitation benefits, $250,000 as a permanent impairment benefit, $1.2 million in additional transitional benefits, if needed, and up to $1,200 per week in wage-loss benefits — and then wage-loss benefits, including and continuing after the age of retirement, for as long as they’re needed.

No matter how you do the math, it’s a significantly better outcome than the current system for this injured person, even though they are able to sue under the current system and they won’t be able to sue under the new system.

S. Furstenau: I just want to be really clear on the last part, and I appreciate the details of the answers from the minister on this. If the pedestrian or the cyclist does not have any ICBC coverage of their own because they don’t own or drive a car, are they still eligible for the coverage that you just outlined?

Hon. D. Eby: Yes.

The Chair: Attorney General.

Hon. D. Eby: Yes, with apologies to the Chair.

The Chair: Thank you, Attorney General.

I recognize the member for Cowichan Valley.

S. Furstenau: I can only imagine how the Attorney General feels at 6:07 on a Friday evening after having done this all day long and yesterday too. So I am delighted that he’s speaking in complete sentences but, even better, delivering very good answers.

We did canvass this a little bit in Committee of the Whole on the bill for changes to ICBC, but if the minister could speak a little more about the culture of ICBC. He did mention, at committee, that he recognizes there is an important cultural shift that’s going to need to happen.

A two-part question here. What are concrete things that the ministry is doing to lead this cultural shift, and will they change the mandate of ICBC to reflect the shift towards a care-based model? He also mentioned that the shift would need to be monitored closely. Can the minister tell us how he would be monitoring and directing his ministry to be doing the monitoring of this cultural shift?

Hon. D. Eby: There are a number of safeguards that we’ve put in place to make sure that things are going the way that we want them to go. First of all, we have, essentially, enforcement tools. The civil resolution tribunal, the fairness commissioner and the Ombudsperson all have the ability to do reviews, make recommendations and, in some cases with the CRT, specifically order ICBC to do or not do certain acts, based on applications that people who are aggrieved make to the CRT.

The member may have been listening in on our earlier discussions about the CRT to date, where the number of disputes has been dramatically lower than we expected. We attribute this, in part, to the success of a shift of culture and available benefits — to actually cover the expense of benefits that people need and to provide additional categories of support to people. It’s our hope that enhanced care will do that as well.

[6:10 p.m.]

That’s the enforcement end of things. Within ICBC, extensive work is happening around a cultural shift within the organization, within their workforce strategy in terms of who is hired and how they’re hired and who works on the new system versus people who will continue working on the older system. But I can also advise the member that we want to hear from groups and individuals outside of ICBC about how they feel that shift is taking place. So ICBC will be expanding its existing customer panel to provide British Columbians more opportunity to provide input on future changes.

We have an injury committee made up of leaders within the disability and rehabilitation community that will be providing us with advice about the experience of their clients and customers in dealing with ICBC so that we can identify trends quickly and address them. We have outside folks who are working closely with ICBC and with government to provide us with advice. We have external enforcement.

Then in terms of the training, there is an implementation plan, an organization level set of metrics expected to be in place by the end of September 2020, which will be tracked organization-wide about how that culture shift is happening and customer satisfaction and so on.

S. Furstenau: Thank you to the minister for that response. I appreciate it.

I’m going to move to a constituency issue and ICBC rates. I have a family in my riding. Their daughter just turned 18 and has one year with her N already and drives to Nanaimo to attend Vancouver Island University. I will point out that there is no option for a bus service between Cowichan Valley and Nanaimo, although we’ve been advocating for it quite vociferously for a few years now. It’s a necessity for young people who live in the Cowichan region to be able to get to Nanaimo. I’m hoping that can change.

This young woman has a part-time job delivering pizza to help pay for her tuition. She went to renew her insurance, and for her little old Mazda car, it was $4,300, which is more than the tuition for her dental program. On top of that, to add delivery insurance was another $1,442. This was in the height of COVID that I got this contact from this constituent. Not only was food delivery quite an important thing at the time, because for a lot of people that was the only way that they were getting food, but for this young woman, being able to have some income was also important.

She was, essentially, put in a position of feeling like she had to choose between her job and her tuition for university next year. I think this is probably a more common issue, particularly in regions that do not have public transportation — that young people really have no choice other than to have a vehicle to get around but have been faced with some pretty significant increases to their insurance rates and are in a position where they can’t afford to pay that. Then they can’t get to work or can’t get to university, and it’s a real stalling point.

I guess my question to the minister is: is he aware of these kinds of issues, and what does he offer as a solution to young people found in this kind of scenario?

[6:15 p.m.]

Hon. D. Eby: During the COVID period, ICBC has waived any additional insurance charge related to delivery of food. I would encourage the member to direct her constituent to a broker to adjust her insurance accordingly. The current expiration set for that is August 20. But we continue to review these emergency-related measures.

The second piece is that insurance is too expensive in the province. I can advise the member, and her constituent by extension, that it is relatively inexperienced drivers — I assume this person falls into that category, with her N and the fact that she’s 18 — who will see among the greatest reduction in their rates following the implementation of enhanced care.

The member rightly points out that that’s a very modest car that this young woman is using. Unfortunately, our insurance system, as it stands, is not really about protecting her vehicle or even necessarily, to a fairly significant extent, her. It’s about protecting her from litigation.

The fact that she may and would — as a relatively inexperienced driver is at significantly higher risk of running into someone — have a very significant tort claim against her that would sue her, and all the associated legal expenses. That’s why it doesn’t really matter what kind of car the inexperienced driver is driving. The actual costs that the insurance is rising to meet are the escalating costs of the legal tort claim that is made.

That’s why I’m very grateful that the member who asked the question and her party supported the reforms that are badly needed and will be implemented in May. Her constituent will be one of the more significant beneficiaries of that reform.

S. Furstenau: I have another question for the minister. It’s maybe a little esoteric, but I’m hoping he can help or maybe provide some guidance about where I can direct this person.

There is an entrepreneur in British Columbia who designs and builds electric vehicles for single passengers. His company is called Electra Meccanica, and he produces vehicles called Solo vehicles. He’s having a hard time getting these vehicles certified for sale and use in the province and is wondering what he would need to do to be able to achieve the certification process, given that there is a combination of things here.

He would be keen to manufacture these vehicles right here in British Columbia, which would be a great thing for us to have as a economic boost, but also selling single-person electric vehicles which are affordable makes for a less greenhouse gas–intensive response to the worries that people have about public transit right now and being able to get around without using gas vehicles.

If the minister could give any advice about how this person and his company could seek certification of these vehicles so that he can proceed with this opportunity in B.C.

[6:20 p.m.]

Hon. D. Eby: It’s the consensus, at least of the folks around the call, that it’s not our ministry. That’s not of particular assistance to the member. We believe that it is the commercial vehicle safety team within the Ministry of Transportation. What I can advise the member is that we’ll look into it — provide it to her and do what we can to assist the member in at least identifying the appropriate agency of the public service that deals with this.

I think I know either the showroom or the dealership for these vehicles on False Creek in Vancouver. They’re very interesting-looking vehicles. Glad to assist the member however I can.

S. Furstenau: That’s very helpful. I really appreciate that. I’m going to really switch gears now away from ICBC and to the minister’s role as the Attorney General.

The issue of decriminalization of drugs has come to the forefront, with the Premier writing a letter this last week and the RCMP making the call for a decriminalization of personal levels of drugs. Our own provincial health officer, lauded around the world for her excellent work on COVID, has called for a change to the system of how we treat people who use drugs so that it can be seen as a health issue as opposed to a criminal issue.

I would like to canvass the minister’s views on decriminalization of drug use in B.C. What are his thoughts on the impacts to the criminal justice system as a result of drug use being a criminal offence? Does he see this as the resources being put into the criminal system as opposed to in the health system, which could be helping people with their addictions?

Hon. D. Eby: I can certainly advise the member that I’m fully in support of the Premier’s request to the federal government to expedite consideration around an exemption for British Columbia in relation to small personal amounts of controlled drugs and substances and exempting individuals in British Columbia from criminal prosecution for what I see to be a health-related issue rather than a criminal law issue. I certainly have the same perspective as the Premier on this and government policy generally.

I can advise the member that I had a conversation with the federal Justice Minister just today about this, at the Premier’s request, to inquire about where the federal government is on this. They are actively considering British Columbia’s request.

[6:25 p.m.]

Certainly, given the research that indicates that a lot of what we see in terms of the impact of the overdose crisis on people and their families comes from the criminal law, the criminalization of small amounts of illicit drugs like opioids is leading to increased overdoses.

I hope that provides the member with at least my own personal perspective of addiction as being an illness rather than a criminal law issue.

S. Furstenau: As I see we’re fast approaching 6:30, I’ll just end with a request to the minister to provide an update on where things are at with the money-laundering inquiry that was launched last year. Can the Attorney General give us a bit of an update on where things are at, where he sees them going and how long we can anticipate before we get some results from that?

Hon. D. Eby: We’ve been advised by the commission that they expect to get their interim report to us on schedule. They’ve advised that their final report may be delayed, but they’re not certain yet about that.

What they do know is that the hearings that they anticipated conducting in the fall will be delayed because a number of the participants have been impacted by…. They need to dedicate resources to COVID response, which has compromised their ability to, for example, fully provide documentation of other records to the commission so they can do their own work.

In terms of the reports, still largely on schedule, but the fall hearings have been delayed.

S. Furstenau: I’ll just leave it at that before we dive into another big topic. I’ll send the rest of our questions to the minister.

The Chair: Seeing no further questions, I’d like to see if the minister would like to make any closing remarks before I call the vote.

Hon. D. Eby: Thank you to the members for their thoughtful questions throughout the estimates process.

Thank you to all of the staff from the Crowns and from the Ministry of Attorney General for your assistance throughout this process in these socially distanced estimates. I very much appreciate it.

The Chair: Thank you all, Members, and thank you, Minister.

Vote 15: ministry operations, $524,557,000 — approved.

The Chair: There are some additional votes.

Vote 16: judiciary, $83,572,000 — approved.

Vote 17: Crown Proceeding Act, $24,500,000 — approved.

Vote 18: independent investigations office, $9,075,000 — approved.

Hon. D. Eby: I move the committee rise and report resolutions and completion of the estimates of the Ministry of Attorney General.

Motion approved.

The Chair: Members, this committee is now adjourned. Everyone have a safe weekend.

The committee adjourned at 6:30 p.m.