ICBC receives approval for 11.2% rate hike

The British Columbia Utilities Commission, “after considering the evidence and arguments of all parties,” has given the green light to an 11.2% rate hike for universal compulsory automobile insurance in the province for 2012.

The approval of the double-digit increase for basic insurance follows a request from the Insurance Corporation of British Columbia (ICBC) and applies to the policy year starting Feb. 1, 2012, notes an Aug. 16 decision by the commission. In its application, the ICBC submitted the need for the increase is based on two primary factors:

*            declining interest rates in a period of global economic uncertainty has significantly reduced the yield that ICBC is obtaining on invested premiums collected and Basic equity; and

*            increasing bodily injury claims costs, with the main change from past years being higher claims frequency.

ICBC has previously announced a proposed shift to a risk-based auto insurance pricing model from the claims-rated scale (CRS).

Under the CRS, all new drivers pay a base rate for auto insurance and their premiums are adjusted up or down on the scale depending on their number of claims. With a risk-based pricing model, however, low-risk drivers would be offered lower premiums and higher-risk drivers would pay higher premiums.