ICBC files basic rate application
December 14, 2018
ICBC will submit its next basic rate application with the British Columbia Utilities Commission later today, asking for a 6.3 per cent increase to basic insurance rates – an increase which would have needed to be almost 40 per cent if not for the major reforms being introduced to B.C.'s auto insurance system.
As widely reported last month, ICBC is projecting a net loss of $890 million for its current fiscal year, as external pressures continue to grow from a record number of crashes taking place in B.C., and the increase in claims volume and higher claims costs.
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. These costs have been spurred by increased injury claim legal representation, larger payouts and the rise in large and catastrophic injury claims.
Government and ICBC have responded to these challenges by putting in place major reforms to the auto insurance system in B.C. to reduce the burden that rising claims and legal costs are putting on the insurance rates British Columbians pay. B.C. is the last province in Canada to introduce some form of restrictions to address rising minor injury claims payouts. Without these changes, every vehicle owner in B.C. would be faced with an approximate $360 increase to their basic insurance rates.
The significant reforms will reduce legal costs by introducing a limit on payouts for pain and suffering for minor injuries and a new dispute resolution model, while at the same time providing substantially increased care and medical benefits for anyone who is injured in a crash. These changes are projected to bring in net savings of $1 billion annually to ICBC – without these changes, British Columbians would be paying more for their basic insurance.
"The changes being made at ICBC today are arguably the most substantial in the corporation's long history and to the auto insurance industry as a whole in this province," said Nicolas Jimenez, president and CEO at ICBC. "While we acknowledge no rate increase is welcome news, it is encouraging to see these major reforms already having an impact on our insurance rates. The next year will be a very important one for us – our job is to ensure our customers continue to see the benefits of these massive changes on both the rates they pay and the care and benefits they receive."
If approved, the new basic insurance rate would be effective April 1 and will mean an average increase of less than $60 for personal customers' basic insurance coverage.