The Insurance Corporation of British Columbia (ICBC) has been at the center of an auto insurance storm this past week. A leaked internal report shows that the provincial public insurance provider is in financial dire straits. As such, auto premiums could rise by nearly 30% to balance the books.
While the head of the organization insists premiums will not be increased by that much, concerns remain. However, one expert believes the negativity is premature and that instead British Columbia authorities should begin to listen to the report.
Chuck Byrne, executive director and COO of the Insurance Brokers Association of British Columbia (IBABC) told Insurance Business the report is “exceptionally accurate, well-written, and very true to the issues”. He adds that IBABC will be taking points on board and seeking to implement change.
Among the reports revelations is the financial situation of the ICBC. A growing number of collisions in B.C. have left the insurer struggling to stay afloat. In recent years, claims have spiked and so has the cost to repair a vehicle or pay for human recovery. ICBC cannot keep pace with the financial demands and could raise premiums to compensate.
“Even if ICBC had a crystal ball for this situation and increased rates alongside accident trends, it still would have been a difficult problem,” explained Byrne. “No matter how much rate and premium you throw at the problem, that will never be the definitive solution. It comes down to behavioural change and product reform.”
While the report recommends a 30% increase on premiums, B.C. Attorney General and head of ICBC David Eby says he will not oversee such a rise. Byrne agrees that a 30% increase is unlikely as maintenance of affordability for auto insurance has been something most B.C. governments have sought.
“BC brokers are well in tune with the consumer needs for coverage, the complexities and nuances of the ICBC system and the coverages in BC that are available. They do a great job in advocating and briefing the client in that regard,” said Byrne. “Brokers need to be explaining what the media is covering and educating clients about the decisions made by the Government and ICBC.”