March 7, 2005 by Canadian Underwriter
Famous for its criticism of private insurers, the Consumers’ Association of Canada (CAC) is this time aiming its disapproval at B.C.’s public insurer.
The CAC, which has stated on numerous occasions its preference for publicly-run auto insurance systems, says the Insurance Corp. of B.C. (ICBC) should reduce its rate to offset record profits announced late last week. “Over the last three years ICBC has generated two thirds of a billion dollars in profits. It is scandalous that rates are not going down, especially for good drivers," says CAC president Bruce Cran.
Cran says it is ironic to see private insurers "falling over themselves to claim they are reducing rates" when a government-run entity has given no indication it will make such reductions. “The reason is that ICBC has again become a political pawn of the provincial government," he concludes. He claims the government wants to see ICBC build up its reserves so it can compete with private insurers. He also claims ICBC is "picking the pockets of B.C. drivers for $500 million in order to finance this crazy scheme" of competing with private insurers.
With the announcement of a $389 million profit for 2004, ICBC notes that its profitable years are used to boost reserves to offset unanticipated "spikes" in claims costs. As well, ICBC notes that the combination of relatively low claims costs and high investment returns seen in 2004, as well as favorable development on prior year claims, is unlikely to be repeated in 2005.