August 26, 2016 by Canadian Underwriter
The Insurance Corporation of British Columbia (ICBC) announced on Thursday that it will submit its 2016 basic rate application to the British Columbia Utilities Commission, asking for a 4.9% increase to basic insurance rates – lower than last year’s 5.5% increase.
If approved, this will mean an average increase of $3.50 per month for personal customers’ basic insurance coverage, ICBC explained in a press release.
“The external pressures on insurance rates in B.C. are very real and they’re accelerating, including an escalation in the number of crashes, the number of claims being filed and the cost of settling those claims,” ICBC said in the release.
Among the contributing factors was a rapid increase in the number of reported crashes. The number of crashes across B.C. jumped by 15% in two years, from 260,000 in 2013 to 300,000 in 2015. As well, the number of injury claims per 100 crashes has jumped by 32% over the last six years.
Other “external pressures” include:
“We certainly don’t like to have to ask our customers to pay more but these external pressures are very real and they have created a perfect storm which we are struggling to hold off,” said Mark Blucher, ICBC’s president and CEO, in the release. “We’ve worked hard to get this rate increase lower than last year’s but the amount of basic premiums we collect will still not cover the increasing amount we’re paying out in basic claims costs.”
To cover the costs of more crashes and more claims, ICBC would need to charge every customer approximately an extra $130 a year, the release said, which would have required a rate increase of 15.5%. Instead, in partnership with the provincial government, the corporation has implemented various initiatives aimed at alleviating the escalating pressures on auto insurance rates in the province, including:
Blucher added in the release that ICBC is also looking at how other jurisdictions are dealing with some of the same challenges.
The rising number of crashes, injuries and the cost of these claims, is also putting pressure on ICBC’s optional insurance rates as liability payouts above $200,000 and collision and comprehensive coverage for vehicles are covered under optional insurance, the release said. The average personal insurance customer who purchases optional extended third-party liability coverage – plus collision and/or comprehensive insurance – can expect to pay an additional $5 per month for their full basic and optional coverage.
B.C. Transportation and Infrastructure Minister Todd Stone said in a statement on Thursday that the transportation and infrastructure ministry worked closely with ICBC “to explore every possible avenue” to ensure that insurance rates remain as affordable as possible for British Columbians.
“The reality is that ICBC continues to face mounting costs as a result of the frequency, complexity, and severity of bodily injury claims, in addition to higher vehicle repair costs,” Stone said in the statement. “The actual cost of these pressures would have required a rate increase of 15.5%. However, government and ICBC have taken a number of steps to protect families from the full cost impact of these pressures. We will continue to work with ICBC to identify and implement longer-term, sustainable measures that will ease the pressure for future rate increases.”