ICBC Insurance Rate Increase Sought, CEO Cites Rising Costs

[key2thecup]

ICBC Insurance Rate Increase Sought, CEO Cites Rising Costs

VANCOUVER - British Columbia's government-run auto insurance company is seeking permission to once again hike its premiums, prompting critics to question why the Crown corporation is increasing the burden on drivers as it continues to rake in hundreds of millions in profits.

The Insurance Corp. of B.C. announced Friday it will be asking the province's utilities commission for permission to increase its rates for basic automobile insurance — the type of insurance required by law and only available through ICBC — by 4.9 per cent, effective Nov. 1.

ICBC stressed reductions in optional coverage will mean most drivers will pay an average of $11 more a year.

The request comes after ICBC increased basic insurance rates by 11.2 per cent in 2012, then the first increase in five years.

Mark Blucher, the corporation's interim president and CEO, blamed the latest rate hike on rising costs for personal injury claims partly due to an increases in accidents involving distracted drivers, pedestrians and bicycles, and partly due to higher medical and legal costs that have driven up the average price of those claims.

"It's cumulative," Blucher said in an interview. "When you have average costs of these claims increasing as well, it doesn't take too many claims to increase the costs."

The corporation said injury claims reached $1.9 billion in 2012, an increase of more than $165 million from the previous year. The total bill for such claims in 2013 is expected to top $2 billion for the first time ever, the corporation said.

Blucher said one additional claim for every 1,000 drivers increases ICBC's claims costs by $100 million.

ICBC is asking the B.C. Utilities Commission to immediately approve the 4.9 per cent increase on an interim basis starting Nov. 1 while the regulator considers whether to make the new rates permanent.

At the same time, ICBC also announced plans to reduce its optional coverage, such as collision insurance, by four per cent.

Since 80 per cent of drivers in the province purchase their optional coverage through ICBC along with their mandatory insurance, the combined impact on those customers will be $11 a year, the corporation said.

For the remaining customers who only have basic insurance with ICBC, either because they purchase extended coverage from a competitor or because they simply don't buy optional insurance, their rates will increase by about $33 a year.

B.C. is one of four provinces, along with Saskatchewan, Manitoba and Quebec, that have public auto insurance.

While ICBC has a government-mandated monopoly on basic insurance, it competes with other providers, such as banks, private insurance companies and the B.C. Automobile Association, for optional coverage.

The optional insurance arm of ICBC routinely makes a profit, which is then transferred back to the provincial government.

For the current fiscal year, ICBC's net income is projected to be $257 million, of which about $237 million is expected to be transferred to the province.

Blucher said the two streams are entirely separate. He insisted revenues from one side of the corporation's business don't affect the other — in other words, profits from the optional insurance can't be used to reduce basic insurance rates.

"One is a bodily injury business, a mandatory business, and our focus is on providing coverage levels that are very good and keeping our rates as low as possible," he said.

"On the optional business, we're in a fully competitive market and it's run quite independently."

Mable Elmore, a critic with the Opposition NDP, said the Liberal government should stop skimming ICBC's profits for itself and instead instruct the corporation to use that money to reduce rates.

"I think it (the proposed increase) should be cancelled and I think we should see rates come down in B.C.," said Elmore.

"Those profits should be reinvested back into ICBC. Look at it as a whole integrated corporation."

Transportation Minister Todd Stone said he was comfortable with ICBC's request.

He said the corporation appears to be working to control its costs and keep rates low, noting ICBC eliminated more than 260 positions, mostly in management, last year.

"I think what we see in the proposed rate changes is that the vast majority of drivers, they're going to see a very, very minor increase," said Stone.

Neither the Liberals nor the New Democrats have expressed any desire to move away from the public insurance model.

Exactly how auto insurance rates in B.C. compare with other provinces depends on who you ask.

Groups such as the Fraser Institute and the Insurance Bureau of Canada, both of whom advocate for fully private insurance systems, routinely place B.C. at or near the top.

However, Stone insisted such comparisons are difficult, especially with so many variables between individual drivers.

"I think the rates are fairly competitive when compared across the country," he said.

"Depending on your classification and years of experience, you may pay a bit more or a bit less, depending on where you live."

Serge Corbeil of the Insurance Bureau of Canada acknowledged it's difficult to make "apples-to-apples" comparisons of rates between provinces, but he stood by his group's assessment that B.C.'s rates are the second highest in Canada, below only Ontario.

He said B.C.'s own rate proposal — increasing basic rates while reducing prices for optional insurance — is proof the private model works better for consumers.

"Where ICBC faces competition, they've been able to magically find ways to reduce the rates there," he said.

"It's where they have a monopoly that rates rarely go down. The only reason ICBC started lowering its optional rates is that they faced some serious competition."

http://www.huffingtonpost.ca/2013/08/30/icbc-insurance-rate-increase_n_3846092.html?ref=topbar

[Armada]

God damnit..

Ever since I got my license I've had 20% reduction yet the rate keeps going up...

ICBC's a scam.

[Warhippy]

Now in the same report they expect record profits next year while accidents auto crime and false claims and fraud have all dropped in consecutive years.

A scam? Hst won't pay for itself I guess now that its gone

[inane]

This, among many other things is how we pay for all this highway construction.

[Warhippy]

This, among many other things is how we pay for all this highway construction.

[thedestroyerofworlds]

Haven't had an accident or speeding ticket in over 10 years.

Here's a thought, maybe increase rates for people do not have their safe driving discount or people who get speeding tickets. Leave "safe" drivers rates the same. Double or triple fines. Get a fine or an at-fault accident 75% or greater you go on probation. Get another while on probation you lose your license. Bad drivers should be paying WAY MORE. IT will force "bad" drivers to change.

[hudson bay rules]

Still much cheaper than what I pay in Toronto. Ontario is a scam. You guys have no idea. I miss ICBC. I was a Road Star with a 40%+ discount and now I'm paying double for less coverage.

[lowest common denominator]

Rising Costs?? Probably more like declining numbers of clients, as young people head east to Alberta and Sask. in order to earn a decent living for themselves and their families.

2 silver linings in moving away from BC : Paydays and ditching ICBC