VANCOUVER _ The Insurance Corporation of British Columbia will seek a 4.9-per-cent hike to its basic auto insurance rates, but a company official warns the increase could have been much higher.
The corporation has submitted its application to the B.C. Utilities Commission, with interim approval expected in early September, covering rates effective Nov. 1.
ICBC estimates the increase will add about $3.50 per month to the cost of basic insurance. A 2.8-per-cent increase is also proposed for optional insurance rates, such as comprehensive coverage that applies to everything from theft and vandalism to vehicle damage caused by an earthquake or a falling tree.
The corporation estimates customers who buy optional, extended third-party liability, plus collision or comprehensive, should expect to pay an additional $5 per month, if the utilities commission approves the application.
Mark Blucher, the corporation’s president and CEO, said a number of factors are behind the application for a rate hike.
“It’s the rapid increase in the number of crashes, it’s more vehicle damage and injury claims being reported and that’s being compounded by higher vehicle repair and injury claims costs,” said Blucher.
Vehicle damage claims were also up 11 per cent while the number of crashes across British Columbia has climbed by 15 per cent since 2013, to 300,000 last year.
“In B.C., the number of vehicles on our roads in 2015 went through three million for the first time ever to 3.1 million vehicles, and that was up 10 per cent from 2011,” said Blucher, offering one reason for what he said is a continent-wide spike in collisions.
Drivers are spending more time behind the wheel and urban areas are busier than ever, while distracted driving adds to the problem, he said.
ICBC data showed injury claims are also on the rise, along with the number of victims injured per crash. It paid $2.4 billion in injury claims in 2015.
“In previous years we have had one significant relief against this rise in claims cost, and that has been our very strong investment income, but because of increasingly challenging investment markets and historically low interest rates, we can’t rely on that to the same extent we did in the past,” Blucher said.
In 2015, Blucher said ICBC’s investment income was $920 million at the end of the year, but midway through 2016 that amount stood at $44 million.
To make up for the shortfalls, Blucher said ICBC had launched several initiatives, including a government-approved transfer of $472 million from its optional insurance business to its basic business, a reduction in the number of top executives and their salaries, and an overhaul and modernization of its business practices.
The 4.9-per-cent increase is lower than the 5.5 per cent approved in 2015, but Blucher said without taking those internal measures ICBC would have needed a 15.5-per-cent increase to cover 2016 costs.
Transportation Minister Todd Stone said the government has worked with the insurance corporation to “remain as affordable as possible.”
“The reality is that ICBC continues to face mounting costs as a result of the frequency, complexity, and severity of bodily injury claims, in addition to higher vehicle repair costs,” he added.