January 4, 2006 by Canadian Underwriter
Auto insurance rates may rise due to increasing injury claims costs which means the ICBC’s plans to keep basic rates frozen in 2006 will likely be abandoned, according to a recent warning from the provincial Crown corporation.
“We’re seeing a deterioration in claims costs,” ICBC spokesman Doug McClelland said. “We need to take more time to get a better understanding and consider the question of whether our application should change.”
The insurance corporation’s decision to rethink how high premiums should be set is a recent trend towards result of rising injury claims costs, which were flagged in October. ICBC advisors subsequently suggested a 4.2% basic rate hike was required.
“Failing to increase rates when you have to is just creating a problem further down the road,” McClelland says.
According to McClelland, the cost increases have almost entirely come from the rising costs of injuries and medical treatment, not damage to vehicles or property. It is interesting to note however that safer vehicle designs may be provoking rising injury costs because, according to McClelland, safer cars mean that “people who would have died in the past are severely injured instead Catastrophic injuries can be extremely expensive.”
Hearings before the B.C. Utilities Commission (BCUC) regarding the ICBC’s proposed basic rate freeze and support system for revenue requirements were set to resume Jan. 5 but have now been postponed until the corporation files a revised rates proposal by Jan. 27.
According to Jim Quail, of the B.C. Public Interest Advocacy Centre, approval of any proposed rate increases will probably not be finalized by the BCUC before spring.