ICBC seeks 4.9 per cent basic rate hike as crashes, costs climb

$60 a year increase for most drivers once optional auto insurance increase is included

Rising numbers of crashes and higher claims costs are hurting ICBC's bottom line.

Rising numbers of crashes and higher claims costs are hurting ICBC's bottom line.

ICBC wants to increase basic auto insurance rates by 4.9 per cent – the fifth straight annual increase – as it continues to grapple with rising numbers of crashes, claims and dramatically increasing costs.

The typical driver will pay $3.50 a month or $42 a year more for basic insurance if the hike is approved.

But the corporation is also raising optional rates by 2.8 per cent so the average customer who buys both basic and optional insurance with ICBC will see their insurance bill rise $5 a month, or $60 a year.

ICBC CEO Mark Blucher said the basic rate hike would have been much worse – 15.5 per cent translating into a $130 annual premium increase – had the province not approved another major transfer of $472 million from the optional to the basic side of operations.

A compounding factor has been the long decline of interest rates, which result in less investment income revenue to ICBC.

“These external pressures have really created a perfect storm and it’s a really significant challenge for the organization,” Blucher said in an interview Thursday.

ICBC had raised rates 5.5 per cent a year ago, and the province’s rate smoothing policy requires the annual change be within 1.5 per cent of the previous year’s increase.

The number of crashes has climbed 15 per cent in two years and damage claims are up 11 per cent.

Vehicles are increasingly reliant on technology and expensive materials that have become more costly in recent years as the loonie sagged against the U.S. dollar.

Despite much safer vehicles, injury claims have soared to $2.4 billion, up 60 per cent from $1.5 billion in 2008.

“We’ve seen no evidence that these strong trends are abating,” Blucher said. “In fact, if anything, they’re continuing to escalate going forward.”

Blucher also noted there are more cars on the road in B.C. today – 3.1 million up from 2.8 million in 2011 – and people are driving more because of cheaper gas, contributing to more accidents, particularly in densifying urban areas.

And he pointed to personal injury lawyers as an aggravating cause of ICBC’s spiralling claims costs.

“B.C. is the only province in Canada where you can sue another motorist for even a minor traffic accident,” Blucher said, noting an increase in lawyer-represented claims and advertising by injury law firms.

Internal operating costs have been cut by $186 million a year, and ICBC is counting on more savings ahead, through its modernization program, by more aggressively combatting insurance fraud and from a hoped-for drop in distracted driving as motorists respond to stiffer penalties.

But transfers from the optional side to bolster the basic side will likely be needed for the foreseeable future, Blucher said, because basic premiums can’t keep up with rising costs.

In a surprise move, the B.C. government will this year forgo extracting its usual $160-million annual dividend from ICBC’s optional side into general revenue.

“Forgoing the dividend this particular year is one strategy amongst a litany of others we’re employing to get that basic trate increase down,” Transportation Minister Todd Stone said.

Stone said the $514 million the province has transferred out of ICBC in dividends since 2012 is small compared to the $1.4 billion over the same period that has been shifted from the competitive optional side to basic to apply downward pressure on basic rates.

The minister would not say if the government would permanently give up the ICBC dividend.

Adrian DIx, the NDP critic for ICBC, said the dividends to government have exceeded $1.2 billion since 2010 and predicted they’ll resume after next year’s election because the BC Liberals are “addicted” to using ICBC as a “profit centre.”

Dix said the reliance on shifting huge amounts of capital from optional to basic raises troubling questions.

“Next year they’ve got to find that $472 million,” Dix said. “What they’ve done is create a disaster at ICBC and their only hope is to deceive the voters until after the election.”

He said ICBC’s new move to hire more claims staff underscores problems with completing the computer modernization that was supposed to make operations more efficient.

“The transformation project has taken longer than World War 2 and is not close to finished.”

ICBC’s basic rates rose 11.2 per cent in 2012 and at least five per cent every year since.

The new rate hike is subject to B.C. Utilities Commission approval.

ICBC Rate Pressure Charts

Just Posted

The end of an Echo
The end of an Echo

Invermere Valley Echo shuts down operations in Columbia Valley

Creating a new narrative for Canal Flats

Economic development consultant hired, lists vision for next 90 days

Princeton wildfire phots courtesy of Debbie Lyon.
UPDATE: Crews battle as wildfires rage in B.C. Interior

Crews brace for another day on B.C. firelines as no let up is likely

VIDEO: B.C. wildfires by the numbers
VIDEO: B.C. wildfires by the numbers

Wildfires continue to engulf regions of B.C.’s forests and communities.

Aerial view south of Williams Lake Friday afternoon shows dry lightning storm passing over, leaving fire starts behind. Lightning sparked more than 100 new fires Friday. (Black Press)
VIDEO: More than 180 wildfires burning across B.C.

Firefighters from other provinces called in to assist

DTSS Grad March 2017
DTSS Grad March 2017

DTSS Grad March 2017

59 cats seized in Chase
59 cats seized in Chase

59 neglected and injured cats were seized from a property in Chase

(Flickr/Andreas Eldh)
Soundgarden singer Chris Cornell dead at age 52

The singer/songwriter passed away early Thursday morning in Detroit

Paying tribute to a primeval passage
Paying tribute to a primeval passage

Uninterrupted celebrates the Adams River sockeye run in an extraordinary way.

UPDATE: Pemberton Music Festival cancelled, no automatic refunds
UPDATE: Pemberton Music Festival cancelled, no automatic refunds

In the past, the music festival located in Pemberton drew large crowds last year of 180,000 fans

Photo by: WeissPaarz.com
Medical wait times cost B.C. patients $2,300 each

New Fraser Institute report places B.C. at second worst in costs associated with long wait times

UPDATE: 22 killed at Ariana Grande concert
UPDATE: 22 killed at Ariana Grande concert

Witnesses reported hearing two loud bangs coming from near the arena’s bars at about 10:35 p.m.

A university study finds that about nine per cent of Canada’s Grade 11 and 12 students – roughly 66,000 teens – have driven within an hour of drinking and 9.4 per cent drove after using marijuana.                                 Photo: Now-
Leader file
One in three Canadian high school students have rode with drinking drivers, study reveals

Nearly one in five rode with a driver who’d been smoking pot

Top court to hear federal government’s appeal on residential school records
Top court to hear federal government’s appeal on residential school records

A lower court judge ruled to destroy the stories after 15 years unless consent is given to preserve

Most Read