ICBC wants to hike basic rates because of rising number of claims, legal costs

​ICBC wants to increase insurance rates by an average of $3.50 per month for basic coverage in order to offset costs caused by an increased number of claims and the rising cost of settling those claims.

The provincial insurance corporation said it is asking the British Columbia Utilities Commission to approve a 4.9 per cent rate increase because it says "external pressures" on insurance rates in B.C.  are "accelerating."

"We certainly don't like to have to ask our customers to pay more but these external pressures are very real and they have created a perfect storm which we are struggling to hold off," Mark Blucher, president and CEO of ICBC said in a written release.

ICBC is filing an application with the British Columbia Utilities Commission, Aug. 25 to ask for the 4.9-per cent rate hike, effective Nov. 1. Last year ICBC raised rates by 5.5 per cent.

Blucher said the number of vehicle crashes across B.C. rose 15 per cent between 2013 and 2015.

Rates needed to be much higher

He said damage claims and injury claims are also up more than 10 per cent since 2012 at the same time that the cost of repairing vehicles and the legal and medical costs of settling claims has risen.

There are many reasons for this, Blucher said.

"The number of vehicles in the province are up by 3 million. People are driving more, and there a more cars on the road. Distracted driving is a big cause — 1 in 4 fatal accidents are caused by distracted drivers."

To cover the costs of more crashes and claims, ICBC would actually need to increase the rate by 15.5 per cent — which would mean an extra $130 a year per customer, Blucher said.

Todd Stone, B.C.'s minister of transportation and infrastructure, said the government directed ICBC to transfer $472 million in income and capital from its optional insurance business to its basic insurance side to help make up the shortfall.

"Not only will these transfers help apply downward pressure on basic rates, they will also help to rebuild ICBC's basic capital," Stone said.

Stone added ICBC is not allowed to raise or lower basic rates by more than 1.5 per cent.

Announcement 'dishonest': NDP

ICBC said it has introduced other measures as well to help keep rates down.

One of them is computer software upgrade for the system that brokers use to register vehicles and sell auto insurance. ICBC said the new system is expected to save $90 to 100 million every year.

Adrian Dix, the B.C. NDP critic for ICBC, called the Liberal government's announcement on ICBC's proposed rate "dishonest."

"What they call management is trying to get through an election by misleading the voters," Dix said.

"They're transferring money in to try and pretend the financial situation is better than it is. That's a one-time transfer of 472 mil from the optional fund to avoid a major rate increase in an election year. But what it leaves is a disaster, a scooped-up hollow hole for whoever wins the next election."

Dix said ICBC has become more litigious, frequently battling in court over claims and has laid off front-line customer service staff. He also said its computer tech upgrade has taken many years to introduce.

"Before 2011, before this premier, under many governments, ICBC was a non-profit insurer that was focused on customer service. They have changed that and it has been a disaster."

CEO Mark Blucher disagreed with Dix, saying he was proud of the "tremendous job" with customer service. He also disputed the idea that the insurer had become more litigious.

"The accusation that we're more litigious is simply not true. [There were] 67,000 claims in 2015, 191 claims involved in a trial. The other 66,800 — we settled with our customers directly."

Though ICBC say claims are up, Blucher said the insurer has been successful in combating fraudulent claims, with a huge increase of emails and calls to the company's tip line to report potential fraud.

"[That's] good enough for us to now forecast that we're going to make savings of about $21 million over the next year by being able to avoid fraud."

With files from Richard Zussman and The Early Edition

To hear the interview, click on the link labelled Q&A with Mark Blucher, president and CEO of ICBC