Some car owners could see their insurance rates go up on their next renewal.
ICBC announced recently that it was filing an application with the British Columbia Utilities Commission to increase its basic auto insurance rate. If approved, customers could see their basic insurance rates increase more than four per cent starting Nov. 1.
“We put forward capital management framework to the BCUC for their approval, and what that’s doing is saying we want to contain rates within 1.5 per cent of what was approved the previous year, making rates more predictable and stable,” said Mark Blucher, CEO and interim president of ICBC.
For customers with optional coverages, such as collision and comprehensive, rates will decrease by four per cent. ICBC is raising the basic rates due to the increase in bodily injury claims.
“The number of claims that we’re actually receiving is a result of more crashes where drivers are being distracted behind the wheel using their smartphones, and more pedestrians and cyclists, we’re getting more claims from them,” Blucher said. “When we pay those claim amounts to our customers, the amount we’re actually paying is increasing as well.”
He said there are two reasons for the increase in claim amounts: high medical costs and lawyer-represented claims.
If approved, the increase will net ICBC approximately $114 million.
According to the Ministry of Finance’s review of ICBC in August 2012, ICBC paid $576 million in dividends to the provincial government in 2010, and $101 million in 2011. No transfer was made in 2012. In 2013, ICBC will hand over another $226 million. In all, the government has said it plans to take $1.17 billion from ICBC between 2010 and 2014/15.
According to Blucher, ICBC has two businesses, only one of which the government has their hand in.
“The basic business where we are applying for an increase in our rate, that business is separate from our optional business,” he said. “Our optional business, that’s our competitive business, so we compete with other insurers for it. Under a framework we have with government, that’s the business where if we accrue above a certain level of capital that’s actually transferred through to the government.”