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.

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

Rain, storms to hit Kootenays, Boundary amid flood crisis

Environment Canada is calling for 20 to 40 mm of rain by Friday

Thunderstorms headed to the West Kootenay

Environment Canada re-issued their special weather statement this morning,

UPDATED: Horgan says B.C. defending its interests in Trans Mountain pipeline

Canadian finance minister’s update comes the same day Kinder Morgan shareholders plan to meet

RCMP recover stolen items

Submitted Police in Golden recovered multiple stolen items just after 2 a.m.… Continue reading

Editorial: An innocent bear loses its life

This week one of the local conservation officers stopped in, letting me… Continue reading

VIDEO: Canadian Forces help flood-ravaged Grand Forks residents heal

Sgt. Bradley Lowes says the military is used to dealing with traumatic times

UPDATED: Almost 1,200 people allowed to return home in Kootenay-Boundary as floods dry up

Officials hope to have all 3,000 people back in their homes by Monday night

B.C. Lions bring back 6-time all-star offensive lineman Jovan Olafioye

He was acquired by the Montreal Alouettes last year.

Whitecaps rally for 2-2 draw with FC Dallas

Vancouver climbed out of a two-nil hole to tie FC Dallas 2-2

B.C. VIEWS: Making sense of climate policy

Flood and fire predictions have poor track record so far

Chilliwack Chiefs moving on to RBC Cup final after thrilling win over Ottawa

Kaden Pickering scored the winning goal in the 3rd period as Chilliwack won their semi-final 3-2.

VIDEO: As floodwaters recede, crews assess the damage to Grand Forks’ downtown

More than four dozen firefighters and building inspectors came out to help

Wellington Dukes pull off epic upset of Wenatchee at RBC Cup

The Dukes are off to the championship game after downing the Wild 2-1 Saturday at Prospera Centre.

Canada to face U.S. for bronze at world hockey championship

Canada was looking to play in the gold medal game for a fourth straight year, but saw 3-2 loss

Most Read