ICBC Basic Insurance Increase 4.9

Date: 22 DEC 2016posted by Car Rentaledited by WinX

Basic auto insurance for motorists in British Columbia will see a price increase of 4.9 percent. The provincial government has announced it has directed the BC Utilities Commission to approve the rate increase for next year but it wants the insurance company to ensure the rates are in line with inflation for the long term. Transportation Minister Todd Stone is also launching a third party review on keeping rates affordable. "It is also the job of government to make sure ICBC is a viable organization, not just today or next year but well into the future," quoted Stone. "I've heard a message loud and clear that people are worried about the increasing cost of living."

ICBC has been under fire recently for releasing the potential worse-case scenario basic rate hikes climbing as much as 42 percent compounded over the next five years. Their solution was to drop insurance policies for luxury vehicles. Any vehicle that is worth $150,000 or more which is not a limousine, motor home or collector vehicle. Their reasoning - to fix a bumper on luxury vehicle such as a Ferrari would cost over $6000, but in some vehicle's cases it is a complete write off if damages would amount that much. The basic rate between the a luxury vehicle and a more modest vehicle does not see a huge differential.

However, the biggest problem in that line of thinking, is why would the basic insurance rate of a luxury vehicle be similar to my car? Would it sound absurd that a large insurance company which has monopoly of all auto insurance in the province have a difficult time adjusting basic rates dependent on worth of each vehicle? Instead of dropping luxury vehicles, why would they not just charge them more and solve this issue? If someone is driving a Ferrari as their main source of transportation, I am sure they would have the assets and money to pay for a much higher rate than the guy driving a Honda Civic. If not, then they shouldn't be driving a Ferrari. No, this is only a distraction. The launching of a third party review by the Transportation Minister is a joke at best. Launching a third party review will help when you need an unbiased opinion, but when you have a leak, you find the leak and you fix it, in this case, where the money is lost and you fix it.

ICBC claims repair costs are up 17 percent for vehicles and the number of people injured per crash has risen 32 percent over six years. The $2.3 million in savings from dropping luxury vehicle insurance (once again, if they adjusted vehicle insurance rates properly wouldn't be an issue) is dwarfed by the $472 million ICBC needed to take from its optional business this year just to cut a projected 15 percent increase in basic insurance down to the 4.9 percent. The total comes to $1.4 billion earned by its optional insurance business to keep basic rates artificially low for the past several years. So where does all the profit earned from ICBC go? In a self-sustaining profitable government agency, should there not be a rainy day fund if rates were to destabilized? The answer, the government has taken it. Whichever political party in BC has siphoned over $1.2 billion from the coffers at ICBC and turned it into provincial revenue. And now who has to foot the bill of mismanagement of money? The everyday person does.

ICBC chairman Barry Penner said he's received assurances from top ministers that they will no longer take hundreds of millions in dividends from the agency as part of a series of reforms to stabilize ICBC for the next three years. In my opinion, how about not the next three years, how about never. ICBC should be working for the people and not for the government. Why should mismanagement from the government turn into misfortune for people of BC. Let's say the insurance rates do stabilize and the government once again dips their hands in the honey pot and after a few unfortunate years of rising claims and insurance fraud, the rates go up again. Why not learn the lesson now and not offer a repeat later? Why not lower the insurance rates once they stabilize? The price hike is not a normality nor should we treat it as such, why should we, the people, who pay our taxes now suddenly be indirectly paying more taxes through ICBC.

Even Penner said he's aware that ICBC will soon deplete its capital reserves to below safety ratios that are set to leave the corporation with enough cash for an emergency. NDP critic Adrian Dix said ICBC should be restored to a non-profit, it should re-hire front-line claims staff and address the growing number of unpaid claims. After such poor mismanagement, shouldn't somebody be fired or forced to retire? For example the Transportation Minister or the ICBC chairman, shouldn't their objective be working for the people and reducing rates, but instead have done the opposite. "Frankly, I'd like to see our rates come in lower than a 4.9 percent increase," said Penner. Well, frankly, I'd like to not see a rate increase at all.

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