ICBC aims to become more competitive

B.C.’s government auto insurer is looking to become more competitive and behave more like a private insurer, according to the 2004-2006 service plan tabled by the Insurance Corp. of B.C. (ICBC) as part of the provincial budget this week.
Since the introduction of measures to open up the “optional” portion of auto coverage to further competition, ICBC is now required to play by the same rules as private insurers, specifically in terms of financial accounting. ICBC says it will ensure that the optional products is not subsidized by its basic policy business, for which it is the monopoly market.
“For optional insurance, ICBC will be moving towards risk based pricing in a number of areas and underwriting risks more selectively,” the service plan notes.
The Crown corporation is taking a conservative view of returns, scaling back earlier projections for return on equity (ROE). For 2005 and 2006, ICBC is targeting returns of 0.5% and 3.9% respectively, partly the result of the changes to open up optional coverage competition.
The combined ratio is also expected to deteriorate slightly, rising from 104.0% expected for 2003 to 111.5% by 2006. ICBC notes that this figure is not out of line with private market results, but will nonetheless be a challenge as the corporation pays the costs associated with new regulations.
The government insurer also intends to focus on more tangible metrics of progress in all areas, including customer satisfaction, operational effectiveness and road safety.
The full service plan can be accessed at http://www.icbc.com/Inside_ICBC/Servplan/servplan_2004.html.