The Insurance Corporation of British Columbia (ICBC) has asked B.C.’s insurance regulator for permission to raise rates again, despite already charging local drivers the highest auto insurance premiums in the country.
If approved, the proposed rate increase of 6.3% will come into effect on April 1, ICBC announced in a statement released Friday. Drivers can expect to see an average increase of about $60 annually.
The rate hike is expected to soften the blow of ICBC’s net losses in 2018 — a projected $890 million. While the crown corporation’s high rates have already garnered widespread disapproval from local drivers — last year, a staggering 89% of B.C. drivers reported wanting other insurance options — ICBC said that it would have had to increase rates by nearly 40% to cover its losses if reforms of the province’s auto insurance system weren’t currently underway.
ICBC has been in trouble for some time. In January, the corporation posted nearly 1 billion dollars in losses within a nine-month period in 2017, which it blamed on a growing number of expensive large loss claims, as well as older claims extending back to 2010 that grew more complex than initially anticipated — and therefore more expensive to resolve.
For the losses posted in 2018, the corporation has shifted the blame to injury claims, which have increased by 43% over the past five years. Costs have also risen due to more drivers seeking out injury claim legal representation, larger payouts, and a growing number of large and catastrophic injury claims.
The current reforms focus on placing limits on payouts for pain and suffering for minor injuries, as well as developing a new dispute resolution model and increased care and medical benefits for anyone who is injured in a crash.
“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,” said Nicolas Jimenez, president and CEO at ICBC, in a statement. “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.”
B.C. is one of only three provinces in Canada where buying public auto insurance is mandatory. Manitoba and Saskatchewan also have public auto insurance.
Although Saskatchewan’s auto insurance system is one of the few in Canada that actually managed to lower insurance rates this year, critics of ICBC have long blamed the company’s high rates on its public model.
“Today's rate increase is yet more evidence that the solution to the challenges in BC's auto insurance system must be found outside our Crown insurer,” said Aaron Sutherland of the Insurance Bureau of Canada in a statement on Friday.
“Opening BC's auto insurance market to competition and giving drivers choice and the ability to shop around is the best way to improve the affordability of auto insurance in BC going forward,” he added.