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Attorney-General David Eby introduces Jane Dyson, executive director of Disability Alliance BC, at a press conference on changes to the Insurance Corporation of B.C., in the press gallery at Legislature in Victoria, B.C., on Feb. 6, 2018.CHAD HIPOLITO/The Canadian Press

The B.C. government plans to introduce elements of no-fault auto insurance and cap payouts for pain and suffering from minor injuries, measures that it promises will end the financial crisis at the Insurance Corporation of BC. But it will be more than a year before the tough measures are put in place, leaving the prospect of auto insurance rate hikes on the table to address a fast-growing deficit.

The overhaul of ICBC's insurance model includes a shift toward a no-fault model. B.C. is the last province in Canada to abandon a system where accident victims can sue for any type of injury – known as a full tort system. Under the changes announced on Tuesday by Attorney-General David Eby, B.C. will cap pain and suffering claims for minor injuries at $5,500, but will also provide more generous accident benefits, offered equally no matter which party is deemed to be at fault.

Mr. Eby said the main target is "the out-of-control legal costs in the current system for minor injuries." The average settlement for pain and suffering for a minor injury is now about $16,000. The cap will roll back the average settlement to levels last seen in the year 2000.

The change will allow ICBC to offer big hikes to what Mr. Eby called "grossly inadequate accident benefits," and still provide annual savings of $1-billion.

The changes will not be implemented until April, 2019. That leaves Mr. Eby still searching for ways to contain what is expected to be a $1.3-billion deficit at ICBC this year.

The minority NDP government took power last July, and Mr. Eby says the former Liberal government hid the financial mess to avoid difficult measures needed to restore the Crown corporation's balance sheet. He said he will introduce more reforms in the coming months to tackle rising costs, but he would not rule out rate hikes for British Columbia's drivers in the coming year. "My goal is to get rate increases down to the rate of inflation," he told reporters, but added: "It will take years to get ICBC under control."

The next step, he said, will be a consultation process to gauge the public's appetite for an insurance product that targets high-risk drivers. "Bad drivers must pay more, and good drivers deserve a break," he said.

The NDP previously rejected no-fault insurance – a model that has reduced auto insurance costs in other provinces – as a remedy for rising cost pressures. Joy MacPhail, the chair of ICBC, was a cabinet minister in the NDP government that attempted to introduce no-fault insurance in 1997 – and retreated in the face of a public furore led by advocates for people with disabilities.

The proposed amendments do not go as far as strict no-fault systems in place in other provinces, and the NDP government has insisted it would not adopt no-fault insurance.

Ms. MacPhail said on Tuesday that this attempt to change ICBC's insurance model was shaped by that experience, and government ensured that stakeholders were consulted this time. But she said the bulk of the changes announced on Tuesday will not help ICBC's finances in the short term. "The main benefit of the changes announced today will start in 2019," she said.

Jane Dyson, executive director of Disability Alliance BC, attended the news conference and applauded the promise to double accident benefits – such as the cost of medical treatment or lost wages.

The financial troubles of British Columbia's publicly owned auto-insurance company can be traced back to a populist measure put in place by the Liberal government on the eve of the 2013 election campaign.

Andrew Wilkinson, the BC Liberal opposition Leader, called Mr. Eby's reforms "disappointing." He called for a wholesale review of the public insurance model, which he said has become dysfunctional in recent years. He stopped short of saying the Crown corporation should be privatized. "ICBC is worthless. No one would want to buy it."