ICBC CEO comments on proposed rate increases
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On November 29th, Jon Schubert, President and CEO of ICBC, published an open letter to BC residents explaining that due to diminished investment returns and rising bodily injury claims, the corporation intends to raise its rates on basic coverage. For the average customer, this will mean an increase of roughly thirty dollars a year. ILSTV spoke to Mr. Schubert and asked him how he thinks consumers will react to this decision.
Jon Schubert: We’re not happy about any rate increase, but after four years of not having to increase our rates we’re in a different reality today because we’ve got increasing pressures from bodily injury claims and coupled with the diminishing investment returns.
I’m not happy about this and when our customers buy insurance I suspect they won’t be happy about rate increase either, but what we try and do is keep it (insurance rates) as low as we absolutely can.
Narrator: Mr. Schubert says that approximately 88 cents of every premium dollar collected this year goes straight back out to compensate accident victims and cover damage costs to vehicles and property; a ratio he says that is just not sustainable. We asked the ICBC boss if any thought was given to moving to a capped system in BC instead of the full tort system under which it currently operates.
Jon Schubert: What we do is operate in the system that we have and any question about change in legislation would need to be answered by government. So what we try and do is provide our customers with what we think is some of the best insurance coverage in the country, and we have a full tort system here and our medical and rehab benefits are amongst the best in the country.
Narrator: Despite the increase in the basic rate, optional insurance rates will decrease. We asked Mr. Schubert if ICBC’s safety initiatives like the Intersection Safety Camera Program and the Counter Attack Program, impacted this decision.
Jon Schubert: They definitely impacted that. And we know from programs like the intersection camera that they save lives and reduce serious injuries; we measure that. Clearly the most important reason is to stop people from being killed and being badly injured. We invest about $50 million dollars a year in road safety and we know that is a good investment for us to make. The optic in our bodily injury claims is on relatively minor injuries.
Narrator: For its part, ICBC says it has reduced operating costs in 2011 by $26 million and intends to continue the trend into 2012.
Jon Schubert: You know, I think our track record is pretty good on operating costs. We reduced our operating costs by 25% in 2001 and since then we’ve maintained them at the rate of inflation. And it’s something that we make sure we work very, very hard at getting that part of it right.
And if you look at our admin ratio, it’s about four percent. And I think within the industry, we’ll be one of the leaders in industry in our operating expenses.
The most important thing is to make sure we have enough funds to pay claims and we think it’s important for us to continue to do that.
