Cost-cutting key to ICBC review recommendations

The Insurance Corporation of British Columbia (ICBC) will cut management positions in line with a provincial review released Aug. 16.

The review contains 24 recommendations, including several that will see ICBC  better aligned with government’s priority of cost containment, notes a statement from British Columbia’s Ministry of Finance.

“The review identified management growth as an area for improvement,” the statement says. The ICBC will slash the number of staff by 165 to 195 positions over the next two years, the vast majority from management.

Jon Schubert, who was appointed CEO of the corporation in November 2008, has announced he is stepping down as of November 15. Schubert will stay on in a consulting capacity until June.

“ICBC has provided good value for its customers over the last 10 years and kept premium increases low, but our government expects ICBC will make every effort to keep costs to a minimum,” B.C. finance minister Kevin Falcon says in the statement.

For the past 10 years, overall rate increases have been kept to an annual average of 0.8%, with basic insurance increasing 1.6% and optional insurance decreasing 0.3%.

ICBC has put in place a claims cost strategy to keep rate adjustments in line with inflation, and is implementing a multi-year plan to manage claims costs growth to keep rates as low as possible, notes the ministry statement. To bring operating costs more in line with 2008 budget levels, measures are currently under way and ICBC expects to reduce costs by $50 million by the end of 2013.

The report’s recommendations, all of which have been accepted by ICBC, include developing clear expectations on cost containment; developing and implementing a strategy to more effectively manage bodily injury claims; bringing its compensation framework more in line with the greater public sector; and ensuring more consistent compliance with policies.

ICBC will provide quarterly reports to government on its progress.