ICBC posts $45 million income for 2002

B.C.’s public insurer is singing a different tune for 2002, having posted net income of $45 million compared to a net loss of $251 million in 2001.
The money, which amounts to less than 2% of annual premiums, will go into the reserves of the Insurance Corp. of B.C. (ICBC), says president, CEO and chair Nick Geer.
Lowered costs are primarily responsible for the turnaround thus far, he adds. “In 2002, controllable costs were more than 26 per cent lower than in 2000. This is a remarkable achievement by all of our employees.” He notes that staff size has dropped 20% since mid-2001.
Premiums were up to $2.63 billion in 2002, a 7.4% increase over 2001. This is largely the result of rate increases announced in late 2001, as well as a 1.4% increase in basic policies sold.
Claims costs climbed 3.2% in 2002, to $2.19 billion versus $2.13 billion the year prior. Geer calls the increase modest, and notes that along with road safety initiatives, a mild last few months of 2002 also helped keep claims down. The only segment of claims to experience growth in numbers was auto theft, which rose by a dramatic 7%. However, costs per claim are on the rise, by 6.3% for personal injury and 5.6% for physical damage.
The corporation saw an underwriting loss for 2002 of $183 million, compared to a loss of $470 million in 2001.
Reflecting the market as a whole, ICBC was not immune to a challenging investment environment, with investment income down to $327 million in 2002 compared to $454 million in 2001. “Our investment yields have been stronger than most insurers, but the markets are not currently capable of providing the kinds of returns we have seen in the past,” says Geer.
Overall, insurance operations saw income of $144 million, versus a loss of $16 million in 2001. Losses were somewhat less for the corporation’s license and fine collection service, at $84 million in 2002, against a loss of $95 million the year prior.
2001 results were also impacted by a real estate development deal for which ICBC took provisions of $100 million, while in 2002 only $41 million in provisions were made, offset completely by the lease termination settlement.