Government has completed its review of ICBC and will be working closely with the corporation to ensure all recommendations are addressed, Finance Minister Kevin Falcon announced today.

As announced in the speech from the throne and Budget 2012, government is reviewing all Crown corporations. Overall, the review found ICBC has done a good job managing its investments and keeping premium increases low over the last 10 years, with drivers seeing premium increases averaging less than one per cent per year.

The review makes 24 recommendations, including several where the corporation can be better aligned with government's priority of cost containment. ICBC has accepted all recommendations and started work on an action plan to better serve British Columbians. The corporation has fully implemented five recommendations, eight recommendations are partially implemented, and implementation of the remaining 11 recommendations is underway.

ICBC has put a claims cost strategy in place with the goal of keeping rate adjustments in line with inflation, and is also implementing a multi-year plan to manage claims costs growth to keep rates as low as possible. ICBC is working to bring overall operating costs more in line with 2008 budget levels, and as such will have reduced costs by a total of $50 million by the end of 2013.

Management overhead and compensation at ICBC are being made consistent with the fiscal restraint exercised by government. Government has already provided specific direction to ICBC and other Crown corporations on compensation at the executive level. The review identified management growth as an area for improvement, and ICBC will be reducing the number of management positions by more than 12 per cent. Over the next two years ICBC will reduce staff by between 165-195 positions, the vast majority from management.

ICBC is moving quickly to implement the review's recommendations and will provide quarterly reports to government on its progress.

Quotes:

Minister of Finance Kevin Falcon -

"ICBC has provided good value for its customers over the last 10 years and kept premium increases low, but our government expects ICBC will make every effort to keep costs to a minimum. That is why ICBC has been directed to bring compensation more in line with the public sector and develop clear measures for cost containment."

Paul Taylor, board chair, ICBC -

"While the report concluded that ICBC has worked hard to keep rates as low as possible and managed investments well, there are some important areas for improvement. ICBC employees deliver excellent service to B.C. drivers, and I know they're committed to ensuring ICBC makes the improvements needed."

Quick Facts:

• For the past 10 years, ICBC has kept overall rate increases to an annual average of 0.8 per cent, with basic insurance increasing 1.6 per cent and optional insurance decreasing 0.3 per cent.

• In December 2011, higher claims costs and declining investment income led ICBC to request an 11.2 per cent basic insurance rate increase. ICBC also reduced optional insurance rates by 6 per cent.

• ICBC is one of Canada's largest property and casualty insurers, with over 5,000 employees and premiums revenue of $3.7 billion, plus $440 million in investment income.

• ICBC provides driver licensing, vehicle registration and violation ticket administration on behalf of government.

• A network of over 900 independent brokers offer basic and optional insurance from ICBC, as well as optional insurance from other companies.

Learn More:

The ICBC review report is available at: https://www2.gov.bc.ca/assets/gov/british-columbians-our-governments/services-policies-for-government/internal-corporate-services/internal-audits/icbc-review.pdf

ICBC's response to the review is available at: http://icbc.com/news/2012aug16-02

A backgrounder follows.

Media Contacts:

Janet Stewart
Communications Manager
Ministry of Finance
250 356-9872

Mark Jan Vrem
ICBC Media Relations
604 982-2476

BACKGROUNDER

Recommendations and implementation status

ICBC has accepted all 24 recommendations made in the review report. Five have been fully implemented, eight are partially implemented, and implementation of the remaining 11 is underway.

1. ICBC and the Province of British Columbia should develop a closer and more consistent relationship to improve oversight of ICBC and ensure alignment of priorities (started).

2. ICBC's Board should develop clear expectations on cost containment (started).

3. ICBC should develop and implement an overall strategy to more effectively manage bodily injury claims (started).

4. ICBC should review the utilization of internal and external legal resources to maximize cost effectiveness (started).

5. ICBC should reduce total management and professional staffing to a level more consistent with 2008 (started).

6. ICBC should develop action plans, with timelines, for maximizing span of control and reducing management layers across the organization (started).

7. ICBC should reduce total management and professional compensation to a level more consistent with 2008 (started).

8. ICBC should bring their compensation framework more in line with the greater public sector and ensure more consistent compliance with policies (started).

9. ICBC should regularly conduct detailed reviews of the budget to ensure costs are contained and aligned with the Province of British Columbia's priorities (started).

10. ICBC should strengthen their oversight of the corporation's expenses to instil a culture of cost containment and financial discipline (started).

11. ICBC should more clearly demonstrate value for money in procurement, using competitive processes whenever possible (completed).

12. ICBC should develop relevant key performance indicators to ensure it can appropriately monitor its procurement process and performance (completed).

13. ICBC should strengthen the procurement process through the implementation of a vendor complaint and dispute resolution mechanism, and a post-contract evaluation process (completed).

14. ICBC should amend their records retention policy to prevent the destruction of documentation for ongoing contracts (completed).

15. ICBC should ensure that IT policy and procedures are appropriately documented (partially completed).

16. ICBC should ensure that new disaster recovery plans are developed and tested before the new Transformation Program systems are implemented (partially completed).

17. ICBC should ensure the IT security function has the appropriate reporting relationship and authority in the organization (started).

18. ICBC should prioritize and implement the remaining security initiatives stated in the Technology Alignment Strategy, given the significant risk and impact to the Transformation Program and the new IT environment (partially completed).

19. ICBC should provide interim progress reports to the Province of British Columbia on the costs, scope, benefits, and schedule of each Transformation Program phase, along with any variance explanation (partially completed).

20. ICBC should formally involve the Province of British Columbia with significant IT projects to leverage public sector experience and lessons learned from other large scale initiatives (partially completed).

21. ICBC should ensure that key areas identified in the Transformation Program risk assessments are promptly addressed (completed).

22. ICBC should quantify the additional financial benefits to be realized from the Transformation Program (partially completed).

23. ICBC should ensure that comprehensive audits of the Driver Licensing systems are performed regularly, given the sensitivity of the information within the Driver Licensing systems (partially completed).

24. ICBC should place a higher priority on replacing the legacy Driver Licensing systems (partially completed).

Media Contacts:

Janet Stewart
Communications Manager
Ministry of Finance
250 356-9872

Mark Jan Vrem
ICBC Media Relations
604 982-2476