ICBC debt not shops’ fault
Trevor Nichols - Jan 31, 2018 - BC Biz

Image: Contributed

The cost of collision repairs has gone up by 30 per cent over the past two years in B.C., but it’s not the auto repair industry’s fault.

Ken McCormack, the president and CEO of the Automotive Retailers Association, made that argument today, responding to news that B.C.’s provincial insurance corporation’s deficit now sits at $1.3 billion.

In Sunday news release, ICBC said the “sizable and significant” deficit is in part due to a dramatic increase in the number and cost of collisions in the province.

“The number of crashes occurring across B.C. is continuing to escalate year-after-year. As a result, the number of claims we are receiving is growing by thousands,” the corporation said.

Speaking to the press Jan. 31, McCormack didn’t dispute the rising cost of collisions. He did, however, take issue with the idea that repair shops are responsible.

“By putting those numbers out there…  it might leave the public with the impression that shops are conducting themselves in a manner that are escalating those costs. In fact, the body shops in this province have little or no pull whatsoever on those costs,” he said.

“Our concern is that our industry, through these announcements, might end up being used as a scapegoat for the escalating costs at ICBC.”

He pointed out that significant technological advances have made vehicles far more complicated, and therefore much more expensive to repair.

Image; LinkedIn
Ken McCormack

He noted that ICBC decides how much repair shops are allowed to charge for labour, and said there hasn’t been a “significant” rate increase in years. Meanwhile, shops have to invest heavily in equipment, tools, and training to keep up to date.

While “material damage” accounts for about 15 per cent of ICBC’s $4 billion annual claim costs, McCormack said the ARA has solutions for reducing the cost of claims.

One step McCormack said would make a big difference is making it easier for repair shops to get access to used parts.

As the only insurer in the province, ICBC controls most salvaged cars in B.C. It allows recyclers to bid on the parts from those cars, and McCormack claims the corporation ships most of them to out-of-province bidders.

ICBC makes more money selling used parts out of the province than it would selling them in B.C., but McCormack said this means B.C. shops have trouble getting access to any.

That’s significant because used parts have the potential to dramatically reduce repair costs. The difference in cost between a new and used headlight for a high-end car, for example, could be as much as $10,000.

He called on ICBC to give preferential treatment to bids coming from inside B.C. to help alleviate this problem.

McCormack also wants to see more of ICBC’s processing work handled by repair shops. He said the ARA has developed an industry certification program that would see “a lot” of the responsibilities currently taken on by ICBC employees given over to the shops.

This, he said, would make the claim process more efficient, and ultimately save ICBC as much as $10 million a year.

He said the ACA hopes to work with ICBC and the provincial government to figure out solutions to the corporation’s financial crisis.

“We’re not only not part of the problem, we want to be part of the solution,” he said.

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