The Insurance Corporation of British Columbia (ICBC) is in crisis after a recent report deemed the provincial public provider close to financial ruin. Pressure has been mounting on the insurer to raise auto insurance rates, and the corporation says three specific factors are placing a particular strain.
A leaked EY report was made public in July, sparking concerns among customers. It showed that the ICBC is under financial strain through raising claims costs and collisions. The recommendation was to raise auto insurance premiums by up to 30% to help keep the insurance company buoyant.
While some have said such a rate hike will not happen, alternatives for saving the ailing ICBC are few and far between. The current regime blames the previous liberal government in British Columbia for taking billions of dollars from the ICBC when the company had surplus.
Speaking to the Canadian Press, ICBC spokeswoman Joanna Linsangan says there are three factors that are pressurizing the company into increasing auto rates: more collisions, more damage and claims, and higher costs for paying claims.
To support its assessment, the ICBC release the following data:
- On an average day in BC, there are about 875 crashes – resulting in payouts of nearly $13 million in claims. Between 2013 and 2016, the number of vehicular crashes in the region increased by 23%
- Injury payouts spiked 80% over the past seven years. Similarly, vehicle repair costs also increased by 30% between 2014 and 2016.
- BC is the only province without any restrictions on filing lawsuits for vehicle accident claims, which means victims typically receive higher medical benefit and rehab pay-outs – this leads to higher legal costs for ICBC.
- The percentage of claims involving legal representation doubled between 2004 and 2016, from around 25% to over 50%.