B.C.’s public car-insurance provider is seeking a 6.3-per-cent increase in rates as the NDP government attempts to contain massive losses at the Crown corporation while also juggling a campaign promise to keep a lid on such hikes.
The Insurance Corporation of British Columbia announced Friday that it wants the increase to basic insurance rates − which works out to about $60 extra each year for the average plan − starting April 1, if approved by the B.C. Utilities Commission. The government says ICBC, which has a monopoly on car insurance in the province, would have had to increase the rate almost 40 per cent were it not for a series of changes it enacted earlier this year.
David Eby, B.C.'s Attorney-General and the minister responsible for ICBC, said the public insurer is undergoing a “historic modernization” to make rates fairer for people after the previous Liberal government, he said, hid the body’s financial mess and avoided the difficult measures needed to restore its balance sheet.
“The changes will come into effect in the spring, which will significantly reduce the legal costs associated to minor injury claims and provide enhanced care for people injured in crashes,” he said in a news release.
The provincial budget forecast a $1.3-billion deficit at the Crown corporation this year. ICBC, in its own news release, stated that it is now projecting a net loss of $890-million this current fiscal year, which ends at the end of March. The insurer blamed this deficit on “external pressures,” such as a record number of crashes taking place across the province, as well as an increase in the volume and costs of claims.
“The escalating cost of injury claims is the single biggest factor impacting basic insurance rates – injury claims costs have soared by 43 per cent in just five years; projected to total $3.67-billion in 2018 alone,” the statement said. “These costs have been spurred by increased injury-claim legal representation, larger payouts and the rise in large and catastrophic injury claims.”
Aaron Sutherland, the Pacific regional vice-president of the Insurance Bureau of Canada, said the recent changes at ICBC are positive, but much more needs to be done to get to the $500-million in additional premiums the corporation had projected it would garner this year. He said the 6.3-per-cent jump in basic rates should bring in roughly $200-million extra, but he fears that ICBC will have to raise its premiums for optional coverage by 14 per cent to make up the shortfall.
“Where’s the rest of the money coming from?” said Mr. Sutherland, whose group represents private insurance agents and has long argued that B.C.'s publicly owned monopoly on basic auto insurance should be dismantled.
He said the average driver in B.C. will pay about $1,740 a year for car insurance, which he said is much higher than the Canadian average.
Andrew Wilkinson, Leader of the Opposition BC Liberals, issued a statement saying that the new increase shows the need for a “complete overhaul” of the insurance monopoly informed by “the best auto-insurance practices across North America."
An independent 2016 report commissioned by the previous Liberal government and released by Mr. Eby a year ago found that basic premiums in B.C. rose 11 per cent ($130) from 2011 to 2015. In 2016, drivers in the province paid the second-highest rates in Canada, according to the report by Ernst & Young. The report also said B.C. drivers have been sheltered for years from necessary rate increases because of intervention by previous Liberal governments, which used profit from the agency’s optional coverage to keep basic premiums artificially low for years.
With a report from The Canadian Press
Mike Hager