Liberals raises fears of attack on ICBC's business

VICTORIA - So ICBC's board forces out their CEO and launches a national search for a replacement.
They hire a search firm - figure more than $100,000 - and come up with 80 candidates.
And what do you know, the successful candidate, Paul Taylor, was under their nose all the time, working as one of the most powerful officials in the Campbell government.
You can't blame people for being suspicious that a willingness to do the government's will and scale back ICBC was an important hiring criteria.
Taylor was brought in by Gordon Campbell after the election to drive the budget-cutting exercise. He had experience, having done the same thing in the early '90s for Ralph Klein.
But he doesn't have any experience in insurance, or a financial institution, or in consumer marketing, the backgrounds you might expect for the new CEO of a $3-billion corporation. Beyond a fairly brief stint as a senior vice-president for corporate development at TransAlta Utilities, Taylor doesn't have much private sector management experience on his resume. (That's not a prerequisite; good managers have crossed back and forth from government to the private sector.)
Still the move suggests the Liberal want someone they can count on to reduce ICBC's role and open up the car insurance market from private companies.
That was, after all their campaign promise, to introduce "greater competition in auto insurance, to create increased choice and reduce motor vehicle premiums."
But it hasn't worked out. The Liberals picked Nick Geer, a senior vice-president in Jimmy Pattison's empire, as ICBC CEO. And once on the job he decided that the current level of competition served ICBC and its customers well. He won the battles for a while, but was shoved out this summer by the government, leaving with a $450,000 severance deal.
The concept of more competition makes sense. Companies competing for your business should come up with better products and lower costs for consumers.
And right now there is no real car insurance competition in B.C.
ICBC has a monopoly on basic insurance - the coverage every owner must have to pay for damages related to injuries resulting from a crash. That's 60 per cent of the insurance market.
Optional insurance, like insurance to cover repair costs or increased liability coverage, is open to competition, in theory. But practically ICBC's monopoly on the basic coverage makes it simplest for most people to buy that insurance from the Crown corporation as well. Private companies have about 15 per cent of the optional coverage market, and their share hasn't increased under the Liberals.
Overall, that leaves ICBC with almost 95 per cent of the vehicle insurance market.
But if increased competition makes good theoretical sense, there are some giant practical problems.
For starters, any change to increase competitors' market share is going to hurt ICBC's bottom line, and thus taxpayers. (ICBC profits are expected to boost government revenues by $218 million this year.)
One option is ending ICBC's monopoly on basic insurance. But asked what effect that would have, Geer was blunt: "You would find chaos in the marketplace, you would probably see the bankruptcy of ICBC."
Or ICBC could get out of the optional insurance business. But that would reduce revenues dramatically, without allowing a corresponding cost reduction given the overhead. The result would be plunging contributions to government revenues, and rate increases for drivers on basic insurance.
Delivering on the election promise is risky business.
And pushing for more private insurance in the absence of a clear economic justification - and in the presence of clear risks - speaks of ideology, not good management.
The political risks are especially high in the months before an election. British Columbians can still remember the horror stories from other provinces about soaring private insurance rates, and seem generally satisfied with ICBC.
The Liberals have had enough problems with Crown corporations. They should go very slowly on messing with ICBC
Footnote: The Liberals should be daunted by their record of controversy at BC Hydro, BC Ferries and BC Rail. ICBC is ticking along quietly if unspectacularly under their watch: rates have risen about 13 per cent over three years and coverage has been quietly reduced, but no one has complained too loudly.