March 27, 2006 by Canadian Underwriter
ICBC is looking to keep B.C. auto rates stable by clipping its optional rates, creating an average premium reduction of $61 for more than 1 million B.C. drivers.
“Although ICBC has recently proposed an increase in rates to basic insurance, in 2005 ICBC’s optional insurance rates were reduced by $100 million, which resulted in 1.6 million B.C. motorists receiving an average premium reduction of $61,” the ICBC announced recently in a press release.
“In addition, customers who had already renewed their optional insurance with ICBC between January 1, 2005 and May 31, 2005, received refunds worth approximately $40 million, with the average refund more than $40.”
Basic insurance provides protection to all B.C. motorists through a standard level of coverage, including $200,000 third-party liability and accident benefits, and is the minimum insurance coverage legally required to get a vehicle on the road. The B.C. Utilities Commission regulates the basic rates.
Optional insurance provides different coverage than basic insurance, including coverage of damage to or theft of a vehicle and additional protection from third party liability. With optional insurance, ICBC competes with other insurers for business, and the ICBC’s board of directors sets the rates.
Over 70% of the cost of the injury claims that ICBC handles is covered by basic insurance, while optional insurance primarily covers damage to or theft of vehicles and property.
The BCUC has approved a 6.5% basic rate increase on an interim basis as of March 15, and will make its final decision after a public oral hearing in April 2006. If approved, the average increase in basic rates will be approximately $38.
Decisions made by the BCUC on basic rates do not affect optional rates. No optional insurance rate changes for 2006 are being considered at this time, ICBC reports. “The primary determining factor in setting insurance rates is anticipated claims costs,” the company says in a press release.