The sa国际传媒 government is ordering the Insurance Corporation of sa国际传媒 to slash its budget after an "unacceptable" spending spree on managers and perks, the finance minister announced Thursday.
But despite the move, Kevin Falcon acknowledged sa国际传媒 drivers won't see their basic insurance rates drop anytime soon.
Falcon released the results of an audit of ICBC, which concluded that the public insurance corporation has ballooned its management ranks during a time of economic uncertainty in which the rest of government was reining in costs.
"This is something - the combination of more people and higher wages - that is unacceptable, and something that is going to change and change quickly," Falcon said.
In response, ICBC CEO Jon Schubert announced his resignation. He'll leave in November, but continue to collect his full salary as a consultant until June. Schubert earned $486,541 in pay and bonuses last year.
ICBC is the sole provider of mandatory basic auto insurance in sa国际传媒, with more than 5,000 staff. It processes 900,000 insurance claims a year.
The audit found ICBC senior management numbers ballooned almost 41 per cent from 2007 to 2011, while union staff positions dropped one per cent. The new managers enjoyed compensation hikes of 50 per cent.
The managers were paid salaries and bonuses more lucrative than those for the rest of the public sector, the audit said.
Signing bonuses, relocation plans, perks for vehicle allowances and other bonuses were also targeted by the audit. ICBC said it would cancel its perks program.
The spending shows a disconnect between ICBC's finances and those of the sa国际传媒 government and ordinary British Columbians during tough economic times, Falcon said.
The audit contained 25 recommendations, including rolling back management staffing and compensation to 2008 levels.
ICBC board chairman Paul Taylor said the corporation will cut $50 million by 2013 and eliminate almost 200 staff members in the next two years, mostly from management.
Still, the changes won't mean a break on insurance rates for drivers.
ICBC is hiking basic rates this year by 11.2 per cent and reducing optional rates by six per cent. It says a majority of drivers will see an increase of 2.1 per cent, or $27.
The audit said ICBC continues to have difficulty keeping rates low because of declining investment income and increasing claim costs.
Taylor said he hopes the savings ordered by the government will lead to insurance-rate increases at the level of inflation in the future.
ICBC workers are locked in a labour dispute over wages. Their union said the audit confirms an unfair compensation gap between regular staff and managers.
The ICBC audit is the latest in a series of Crown corporation reviews, first announced in the government's fall 2011 throne speech.
Following audits, the government has already intervened on salary, bonuses and other spending at sa国际传媒 Ferries, Community Living sa国际传媒 and sa国际传媒 Hydro, and has imposed a financial restraint package for all Crown corporation executives.
NDP critic Mable Elmore called it "a pattern of mismanagement from the Liberals."
ICBC'S SPENDING PROBLEMS
- The number of employees earning more than $200,000 a year jumped 315 per cent in the last five years.
- ICBC has 10 senior vice-presidents and 13 vice-presidents. The government limits the number of vice-presidents to seven.
- Annual cash perks up to $18,500 for ICBC managers. One manager received $88,000 to compensate for a loss on the sale of a house, another received a $40,000 signing bonus, and yet another received a $4,500 monthly housing allowance.
- Since 2000, legal costs doubled to $279 million from $134 million.
- Bodily injury claims are up 68.3 per cent since 2000, to $1.4 billion from $569 million, but income generated by ICBC's $11.4 billion in investments is declining due to global economic uncertainty.
