ICBC’s Proposed Premium Hike Under Criticism
VANCOUVER - Canadian Direct Insurance says the government insurer's proposed 6.5% increase in mandatory basic auto insurance premiums is an "unsupportable raid on consumers" which should be investigated by the BC Utilities Commission (BCUC) before any action is taken. Last week ICBC asked that the increase be approved "on an interim basis" by the Commission without a public hearing.
Says CDI Chief Operating Officer Colin Brown: "It's pretty clear from the first year of dealing with ICBC at the BC Utilities Commission that ICBC interprets its own numbers to support whatever its current business strategy is. Neither the BCUC nor anyone else understands these now-you-see-them, now-you-don't cost and revenue numbers. ICBC has tried to highjack the whole regulatory process by asking for deadline extensions, burying the BCUC in paper, regularly changing its interpretation of its own statistics - and now asking for a rate increase without even a public hearing. The only appropriate action by the BCUC would be to withhold any approval of any ICBC premium changes until the Commission has established the facts about ICBC's finances and requirements. The best way to do that would be by authorizing and paying for an independent study of ICBC's numbers. Otherwise the BCUC will be abdicating its responsibility to consumers."
The British Columbia Utilities Commission has his sympathy, Mr. Brown said, since "ICBC apparently operates on the philosophy that bamboozlement baffles brains, and they are well practiced at it."
The best model for regulating insurers, he said, is in Alberta, where, in 2004, the Alberta Government commissioned an independent consultant to study the real costs and revenues of the whole industry. On the strength of that study, and public consultations, new controls were put in place to ensure that insurance premiums were fair to consumers.
Mr. Brown said there are three reasons why it would be wrong for the Commission to authorize a premium hike for ICBC basic insurance at this time:
- Since last summer ICBC has led the BCUC and its competitors on a merry chase complete with 800 pages - followed by 1600 pages -- of bewildering filings, shifting assertions and foot-dragging on deadlines. In both their August and October filings, ICBC said that insurance rates should stay the same (even though they were falling across the country). Four months later, using the same database of claims numbers, ICBC changed its 'interpretation' and predicted that claims will rise and it therefore needs an immediate premium increase. This at a time when premiums are falling all across the country. The BCUC simply must get to the bottom of ICBC's costs and revenue requirements before any premium hike - even an interim one - is approved."
- There needs to be an objective examination of ICBC's claim that BC drivers carry lower insurance costs than elsewhere, since this is in dispute. ICBC's average premium in BC in 2005 was $1079. In the same year the average premium in Alberta for all insurance companies was $1004. The average premium for CDI customers in Alberta was $791. It's time the Commission appointed an independent expert to clear this up."
- ICBC has a monopoly over basic insurance, which means people have to pay it. This imposes an obligation on the Corporation to show that it is acting fairly. Some 25% of British Columbians - many of them seniors and people on lower incomes - can only afford to buy basic auto insurance and are forced by law to buy it from ICBC. In the public interest, the BCUC has an obligation to ensure that if these people are to be hit with higher prices for a product they must buy, ICBC needs to make the case in 'open court', as it were. That hasn't been done."
Between 2000 and 2004 bodily injury claims across Canada dropped 38% and collision frequency claims dropped between 9% and 33%. These declining costs, along with changes in deductibles and the introduction of claims ceilings in some provinces, have led to auto insurance costs dropping in most other provinces. Can ICBC prove British Columbia is the only province in Canada where bodily injury and collision frequency claims are rising?
For further information contact: Colin Brown or Karen Hopkins-Lee at 604.699.3652.