ICBC Requests Insurance Rate Increase
ICBC has announced its request to the British Columbia Utilities Commission (BCUC) for a basic insurance rates increase. Explained in an open letter to customers from IBCB CEO Jon Schubert, ICBC hopes increasing costs from claims will be mollified by the basic increase.
ICBC says the company is still striving to provide customers with great service, coverage and low rates, but the current insurance market has taken a toll on the sustainability of the company. Currently, ICBC provides coverage for 3.3 million British Columbians annually and processes 900,000 claims as well as 1.5 million driver licensing transactions each year.
“We provide our customers with some of the best insurance coverage in Canada. As just one example, our customers’ medical and rehab benefits are three-times more than those offered in Alberta and New Brunswick, and six-times those of Nova Scotia,” said Schubert in the open letter.
What issues have been plaguing ICBC in its pursuit of sustainable business? ICBC claims there are new pressures in the market including the impact of the worldwide financial market. First of all, ICBC has offered more reductions than increases of the last few years to ICBC customers—so much that ICBC claims their insurance rates are equal to those of 2008. Additionally, ICBC investment income has dropped $38 million in the past year and is estimated that income at year-end will be reduced $90 million less than compared to 2010 figures.
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Another big issue is claims costs for insurers. ICBC saw an increase of $200 million directly related to claims over the past year, specifically bodily injury claims costs. In 2011, ICBC’s bodily injury costs are going to be approximately $1.7 billion, an increase of $350 million in comparison to figures five years past. In the end, ICBC claims that 88 cents of every premium dollar has been utilized in accident victims compensation.
“Other jurisdictions are facing the same issues. Over the past two years, injury claims in Ontario have increased by approximately nine per cent. In Alberta, the 2010 increase was five per cent. The net result of our diminishing investment income and rising claims costs is a $279 million drop in our net income for the first nine months of 2011,” said Schubert.
ICBC is asking the BCUC for a basic insurance rate increase for those reasons, and expects the rate increase to only affect customers by less than $30 a year on average.
“Going into 2012, we remain committed to providing our customers with the best service and coverage at the lowest possible price,” explained Schubert.