ICBC rate hikes will cost drivers $130 a year on average
Increase will cost average driver $130 a year, help stem company’s losses
Drivers who get their basic and optional insurance through the Insurance Corporation of British Columbia can expect to pay an extra $130 per year as the NDP government boosts insurance rates to deal with serious financial issues at the beleaguered Crown insurer.
On Tuesday, B.C. Attorney General David Eby announced that ICBC would apply to the B.C. Utilities Commission for a basic rate increase of 6.4 per cent, or $57 per year for the average driver.
There will also be an increase in the optional extended coverage rate of 3.1 per cent for the first quarter, with quarterly increases of 2.2 per cent to a maximum of 9.6 per cent.
Drivers who have both basic and optional coverage — most drivers, according to Eby — will face a blended rate hike of eight per cent, or $130 annually, on average.
The rate increases will take effect Nov. 1. The basic increase will be made on an interim basis, subject to the BCUC’s approval of the rate increase application.
“We need to take drastic action to fix ICBC’s devastating current financial situation.” — David Eby
Last year’s basic rate hike was 4.9 per cent.
Eby said the rate hikes would help ICBC get on track after years of being gutted by successive Liberal governments.
“ICBC is one of British Columbia’s most important assets. That said, there are deep and profound issues at our public insurer that need to be addressed immediately in order to keep rates affordable for British Columbians in the long term,” Eby said. “We need to take drastic action to fix ICBC’s devastating current financial situation.”
Eby said the corporation’s finances have been trending down in recent years, and in 2016 it lost more than $560 million.
“That loss is the largest annual loss in ICBC’s history,” Eby said.
The rate increase is expected to bring in $205 million in basic premium revenue — ICBC did not have an estimate for the revenue from the optional increase — but even with the hikes in basic and optional insurance, ICBC’s projected loss for next year is $360 million.
A report commissioned by ICBC and prepared by Ernst & Young that was leaked in July warned that B.C. motorists could see vehicle insurance rate hikes of almost 30 per cent in the next two years if the government doesn’t overhaul ICBC’s basic insurance system.
Eby said that kind of rate increase was not an option, and that even an eight per cent overall increase would be difficult for many people.
ICBC premiums are among the highest in Canada, but according to the report “they are not high enough to cover the true cost of paying claims.” Basic rates have long been subsidized by money from the optional coverage side, however the optional insurance business has been dwindling and suffered a loss in the 2016/17 fiscal year.
The report said ICBC is facing unsustainable financial pressures and requires immediate intervention by the provincial government.
The report suggested measures such as capping payouts for pain and suffering for minor injuries, reintroducing photo radar, upgrading red light cameras, increasing police efforts to catch distracted and impaired drivers, and making high-risk drivers pay more for insurance.
Eby continued to oppose some of the report’s recommendations, including bringing back photo radar and introducing no-fault insurance, which directs a person involved in an incident to deal with their own insurance company regardless of who is at fault.
However, he did announce some short-term measures to improve ICBC’s operations and reduce accident rates. He said rehabilitating ICBC will take years, and more changes will be announced in the coming months and years.
Red light cameras, which operate for only six hours per day, will eventually be in service 24 hours per day. ICBC hopes to implement this “as soon as possible,” but there is no firm timeline.
There were 34,000 tickets issued last year as part of the intersection safety camera program, and net ticket fine revenue was $4.3 million. That money was remitted to the provincial government, which distributed it to municipalities.
There are not currently plans to add more red light cameras.
The government will also launch an operational audit of ICBC; move forward with a pilot project to evaluate distracted driving reduction technology; run a new distracted driving campaign; and introduce a dangerous roads initiative to identify and quickly retrofit infrastructure, regulations and signage at dangerous roads and intersections.
Eby was unable to say what these changes would cost.
In a statement, B.C. Liberal attorney general critic Andrew Wilkinson outlined some of the changes his government made to ICBC — including doubling premiums on high-end vehicles — and framed his government’s practice of transferring money from optional insurance to keep basic insurance rates low as an achievement.
He said ICBC has faced a surge in accidents and claims and that Eby was trying to lay blame, while recycling ideas from the Ernst & Young report.
B.C. Green party Leader Andrew Weaver said that more recommendations from the Ernst & Young report should be implemented and all options that would reduce rates should be considered.