ICBC applies for 6.3% rate increase on basic insurance
The Insurance Corporation of British Columbia is proposing a 6.3-per-cent increase to basic premiums as the public auto insurer tries to recover from a near-$1 billion deficit.
In a statement, ICBC said it would submit the application to the B.C. Utilities Commissions Friday.
If approved, the new basic rate would take effect on April 1 and will mean an average increase of $60 per year to insurance rates.
The proposed hike quickly drew criticism from the Canadian Taxpayers Federation, which called it "unfair" to punish drivers for ICBC's financial woes.
"We think this is fundamentally unfair because we already pay the highest auto insurance in the whole country, so this now means your average auto insurance rate here in B.C. is $1,760 per year—that' the biggest one in all of Canada," said Kris Sims, the federation's B.C. director.
"Can you imagine to make B.C. drivers make up a billion dollars for something that wasn't their own doing?"
Sims said that, in the federation's view, the situation is another reminder of why B.C. drivers need more choices when it comes to auto insurance.
"The fundamental problem here is that we're locked in, no matter if you're a good driver, bad driver, medium driver—it doesn't matter," she said. "You're stuck with ICBC. You have no chance to shop around and we really think that's unfair. We really think that ICBC should be open to competition."
But ICBC's president and CEO said the extra money from the rate hike is simply intended to keep up with the rising number of claims, not help the insurer make up its deficit.
"We charge what we need. We don't make a profit on basic insurance," Nicolas Jimenez told CTV News.
"The reason we're asking for 6.3 per cent, is because, when we're done our modelling and estimates for what we think it's going to cost us to settle crashes that are written next year, we think it's going to be 6.3 per cent more than it is today."
According to ICBC, the escalating cost of injury claims is "the single biggest factor" influencing premiums.
"Injury claims costs have soared by 43 per cent in just five years; projected to total $3.67 billion in 2018 alone," the statement read.
"These costs have been spurred by increased injury claim legal representation, larger payouts and the rise in large and catastrophic injury claims."
The announcement comes as the province introduces new policies aimed at curbing the auto insurer's losses. These include a $5,500 cap on payouts for pain and suffering for minor injuries starting in April.
Had it not been for these kinds of measures, Jimenez said, the consequences for drivers could have been much worse.
"We were looking at an increase of almost 40 per cent if we hadn’t done the things that we're doing with government to try to bring reforms into the system," Jimenez said.
"If there's an encouraging sign in all of this, it would be the fact that the reforms that have been announced by government and that we're working on right now are going to bring about $1 billion worth of savings."
ICBC is currently projected to lose $890 million this fiscal year in what the province's attorney general has referred to as a "financial dumpster fire."
David Eby has blamed a number of factors, including distracted driving, alleged overbilling by auto body shops and financial mismanagement by the Liberals, who were in power for 16 years before John Horgan's NDP took over government in July of 2017.
The 6.3-per-cent rate hike ICBC has applied for, he said Friday, is a realistic step towards stopping the bleeding.
"This is the first time in a long time that ICBC has actually asked for the rate increase they believe will help them meet their financial obligations on the year," Eby said. "Previously, under the rate-smoothing framework, they were only able to ask for a certain amount and they knew they would take a loss on the year."
The province has proposed a number of cost-cutting measures, including changes to the rate formula that target risky drivers.
Last month, ICBC also announced it was slashing its advertising budget in half to spend more money cracking down on bad drivers.
"The projection is that the changes that we're making, the hope is--that everybody has--is that ICBC will be in the black this time next year and that's what we're working towards as a goal,” the attorney general said.
Eby said the way ICBC officials are compensated is also under the microscope after the auto insurer came under fire for handing top executive hefty bonuses despite the dire financial situation last year.
With files from CTV Vancouver's Scott Hurst
ICBC is asking for a 6.3% increase to basic insurance rates. It will submit its application with the British Columbia Utilities Commission later today. If approved rates would increase April 1st. @CTVVancouver #Vancouver— Scott Hurst (@CTVScottHurst) December 14, 2018
While unfortunately our rates need to increase, the major reforms being made to our insurance system are already having an impact – without these changes, the rate increase would be almost 40% per customer. https://t.co/ghZedJRKin— ICBC (@icbc) December 14, 2018