ICBC settles on 5.5 per cent rate hike - Kelowna Capital News
ICBC settles on 5.5 per cent rate hike
by Jeff Nagel - Kelowna Capital News
posted Oct 18, 2015 at 1:00 PM 5.5% rate hike will mean insurance costs an average of $60 more each year.— Image Credit: Kelowna Capital News
The Insurance Corp. of B.C. has decided to raise basic auto insurance premiums by 5.5 per cent, driving up the annual cost by more than $44 for the average driver.
And a further jump in optional premiums for coverage like third-party liability will add nearly $16, for an annual increase of about $60 on average.
The basic premium increase is less than the 6.7 per cent jump ICBC had warned in August might be required as a result of rapidly rising injury claims and the resulting payouts.
The hit is lower in part because the province has approved an unusual $450-million transfer of capital from ICBC's optional insurance business to the basic insurance side.
There's been growing financial pressure on the basic side, while ICBC has had more wriggle room in recent years to actually decrease rates on its optional side, where it does not hold a monopoly and competes with private insurers.
But officials say optional costs are now also on the rise because optional third-party liability insurance covers injury payouts over $200,000.
Adrian Dix, the NDP's critic on ICBC, noted the average driver will be paying nearly 30 per cent more in basic premiums than they did when Christy Clark became premier in 2011.
"Overall what we're talking about is a major, major increase in rates for the average motorist," said Dix, who lays part of the blame on management decisions at ICBC and trouble with the rollout of its new computer system.
He noted the provincial government has not opted to forgo the $160-million annual dividend it extracts each year from ICBC's optional side.
"They're not sacrificing," Dix said. "They're doing a double dip on the optional side."
Canadian Taxpayers Federation spokesman Jordan Bateman said the continued flow of dividends to the government is particularly frustrating.
"Despite the fact we get gouged for more money each year, the government continues to suck all the profits out and puts them into general revenue," Bateman said.
"We have a government that talks about affordability but erodes it when it comes to ICBC rates that continually jump higher than the rate of inflation."
Transportation Minister Todd Stone said more than 80 per cent of motorists use ICBC for both basic and optional coverage and they are paying only 13 per cent more than in 2011 after recent optional rate cuts are taken into account.
Forgoing the annual dividend to government would have only trimmed the basic rate hike to 5.2 per cent, Stone said.
That 0.3 per cent reduction would have been "negligible" in terms of impact on customers, he said, but would "blow a pretty significant hole" in the province's budget.
He called the $450-million transfer a one-time shift that can't be repeated next year because there won't be enough excess capital on the optional side.
ICBC officials also said they're stepping up efforts to combat exaggerated and fraudulent claims.
A new fraud analytics tool is to be deployed early next year to use data, algorithms and statistical methods to quickly flag patterns and high predictors of fraud early in the claims process.
ICBC projects bodily injury claims costs will hit $2.3 billion this year, up from $2.17 billion in 2014. Those costs are up 64 per cent since 2008. The number of injury claims are up about 11 per cent from the previous year.
Another basic rate hike is guaranteed next year. The province's rate smoothing policy requires each new year's rates be no more than 1.5 per cent above or below the previous year's. That means ICBC will be considering an increase of between four and seven per cent next fall.
The proposed basic rate hike, effective Nov. 1, must still be approved by the B.C. Utilities Commission.