Victoria, British Columbia -- December 20, 2016 -- The government of British Columbia has directed the board of the Insurance Corporation of British Columbia (ICBC) to commission a comprehensive independent third-party review to look at a range of options and make recommendations that will keep insurance rates affordable and align future rate increases with inflation.
The announcement was made by Todd Stone, BC’s Minister of Transportation and Infrastructure.
“We are taking action to keep ICBC’s rate increases affordable for British Columbians. Today, I’ve directed ICBC’s board to commission a third-party review with a goal to produce a range of options for ICBC to increase fairness, affordability and sustainability when it comes to Basic insurance rates,” said Stone. “Our goal with this review is to put British Columbians first and for ICBC to manage its cost pressures, ensuring affordable rates for the long term.”
This independent review comes at a time when the frequency, complexity and severity of bodily injury claims, in addition to higher vehicle repair costs, is putting pressure on rates.
The number of vehicle damage claims increased by 11 percent between mid-2015 and mid-2016. The number of injury claims increased by 14 percent during the same period.
Claims have risen in numbers, but the average cost of vehicle claims has increased as well. The increasing costs of repairs drove the cost of claims up by 17 percent between 2014 and 2015. Injury claim costs were up 60 percent in 2015 as compared to 2008.
“As the recently appointed chair of ICBC, I am looking forward to this independent review, which will help us assess and improve our operations, evaluate our management practices and identify additional measures to help ensure rates are affordable for British Columbians” said ICBC Board Chair Barry Penner. “These recommendations will support our efforts as we work with government to keep future insurance rates affordable and in line with inflation.”
BC’s government has also announced that in the interim, and for the coming year’s rate increase, it has directed the British Columbia Utilities Commission (BCUC) to approve a Basic rate increase of a maximum of 4.9 percent or less by Jan. 16, 2017. BCUC has been reviewing ICBC’s rate application since August 2016.
It was announced earlier this year that ICBC would be doubling Basic premiums for high-value luxury vehicles, as well as ramping up the fight against fraud with a new detection tool that’s projected to save $21 million on Basic insurance claims costs in 2017 and up to $44 million annually by 2019. In addition, laws and penalties for distracted driving have been strengthened to crack down on this dangerous behaviour, which continues to be one of the leading causes of crashes in British Columbia. ICBC has also taken steps to improve its claims management system, introducing a new IT system that is estimated to save the organization $90 million a year.