VANCOUVER, Feb. 2 — As a result of significantly increased costs for injury claims, ICBC has applied for a 6.5-per-cent increase in 2006 basic insurance rates with the BC Utilities Commission.
If BCUC approves the rate increase that ICBC is proposing, basic insurance premiums would increase by $38 for the average customer. The filing updates materials provided to the Commission in recent months.
“Over the past few years, ICBC has been successful in keeping BC roads
>safer, our overhead costs under control, and our rates low and stable, but insurance is a volatile industry,” said ICBC’s President and CEO Paul Taylor. “In 2005, basic insurance claims costs rose more than 15 per cent, and we expect the average cost of claims to rise by about four per cent in >2006. We need to raise rates to cover these increases.
“Since 2000, including this proposed increase, on average, basic insurance rates have increased at approximately the rate of inflation,” said Taylor. “For those who buy optional coverage from ICBC, basic and optional insurance rates combined have increased even less.”
ICBC has requested the proposed increase take effect on an interim basis, effective March 15, 2006. BCUC is expected to rule on the request for interim rates in early February.
A key factor in setting insurance rates is anticipated claims costs. Injury claims, which are primarily covered by basic insurance, are the prime driver of increases in claims costs in 2005, and this is expected to continue in 2006. Without a rate increase, basic insurance revenue will not be sufficient to pay for the cost of providing that coverage.
Basic insurance provides protection to all BC motorists through a standard level of coverage. ICBC also sells additional, optional coverage, and competes with other insurers for this business.
In June 2005, ICBC announced $100 million in annual optional insurance rate reductions for 1.6 million BC motorists who buy their optional coverage through ICBC. Optional insurance provides different coverage from basic insurance, including coverage of damage to or theft of your own vehicle and additional protection from third-party liability.
For more information, visit www.icbc.com.