ICBC reports loss for Q3

British Columbia’s public insurer is reporting a net loss of $7 million for the third quarter of 2001, a sharp drop from last year’s net income of $70 million for the same period.
And for the first nine months of the year, the Insurance Corporation of B.C. (ICBC) says it has lost $38 million, as compared with $312 million net income for the same time last year.
Investment income decline is being blamed for the poor results, as is the lack of positive development from prior years’ claims. Overall investment income for the first nine months of 2001 was $286 million, compared to $528 million for the same period in 2000, with $230 million of the decrease attributable to lower bond and equity gains.
Operating loss for ICBC’s insurance operations was actually lower in 2001 than last year. Claims costs were also down by about $3 million over the first nine months of 2001.
The $38 million loss thus far is on target with the Corporation’s predicted yearend loss of $150 million, notes ICBC chair Nick Geer. And the $50 million restructuring cost predicted by the Corporation is not expected to increase.
“With reduced expectations for investment income
and with claims settlements now close to equaling the amount reserved, it is unlikely that prior years’ claims developments and investment income will compensate for rising costs, as they have in the past,” the ICBC notes.
ICBC has applied for an increase in premiums next year, about 7.4% on average. Basic coverage will go up 6.6% and optional coverage 8.7% on average. Minimum deductibles will also go up, the Corporation reports.
“For the last few years ICBC has been able to maintain a rate freeze primarily because of two factors – gains in investment income and favorable prior years’ adjustments,” Geer says. “We’ve now reached a point where rate changes can no longer be postponed, if ICBC’s operations are to break even.”