December 20, 2016 by Canadian Underwriter
The province of British Columbia has directed the Insurance Corporation of British Columbia’s (ICBC) board to commission a comprehensive, independent third-party review to look at a range of options and make recommendations that will “keep insurance rates affordable and align future rate increases with inflation.”
In the interim, and for the coming year’s rate increase, the province has also issued a directive to the British Columbia Utilities Commission (BCUC) to approve a Basic rate increase of a maximum of 4.9% or less by Jan. 16, 2017, the Ministry of Transportation and Infrastructure said in a press release on Monday. BCUC has been reviewing ICBC’s rate application since August.
“We are taking action to keep ICBC’s rate increases affordable for British Columbians,” said Todd Stone, the province’s Minister of Transportation and Infrastructure, in the release. “I’ve directed ICBC’s board to commission a third-party review with a goal to produce a range of options for ICBC to increase fairness, affordability and sustainability when it comes to Basic insurance rates. Our goal with this review is to put British Columbians first and for ICBC to manage its cost pressures, ensuring affordable rates for the long term.”
ICBC board chair Barry Penner said that as recently appointed chair, he is looking forward to the independent review, which will help the corporation assess and improve its operations, evaluate its management practices and identify additional measures to help ensure rates are affordable.
The review comes at a time when the frequency, complexity and severity of bodily injury claims, in addition to higher vehicle repair costs, is putting pressure on rates. For example, between mid-2015 to mid-2016, the number of vehicle damage claims increased by 11% and the number of injury claims increased by 14%, the release said. At the same time, the average cost of vehicle claims is increasing, rising 17% between 2014 and 2015, as vehicles are becoming more expensive to repair, and injury claim costs are up 60% between 2008 and 2015.
Earlier this year, the province announced that ICBC would be doubling Basic premiums for high-value luxury vehicles, as well as ramping up the fight against fraud with a new detection tool that’s projected to save $21 million on Basic insurance claims costs in 2017 and up to $44 million annually by 2019.
In addition, laws and penalties for distracted driving have been strengthened to crack down on this dangerous behaviour, which continues to be one of the leading causes of crashes in British Columbia, the ministry reported. ICBC has also taken steps to improve their claims management system, which will provide more convenient and better service to customers, and they have introduced a new IT system that is estimated to save the organization $90 million a year.
The board will begin the process immediately to find industry experts to conduct this independent review. The board will have more information in the New Year with the expectation that some or all of the work will be completed in time to support next year’s rate-filing process.