Longtime ICBC monitor predicts basic insurance rates to climb at least 6% in April

VICTORIA (NEWS 1130) – As B.C.’s public auto insurer continues to have money problems, drivers are being told to expect another premium hike next year.

Former senior government manager Richard McCandless is suggesting this past fiscal year has been ICBC’s worst ever.

The same week the provincial government reported a budget surplus of more than $300-million, he says it’s not going to be easy to recover ICBC’s operating loss of $1.3-billion and projected losses of more than $600-million this year.

“They’re going to defer the rate hike for basic insurance that should have happened in November. They’re deferring that now until April, so that’s going to cost them, but we might jack the optional rates well before that in September or maybe, they’ll delay to November. Basic –April 2019– probably six to seven per cent increase.”

McCandless says ICBC’s combined capital reserve, which is the Crown corporation’s rainy day fund, is also down nearly $1.5-billion to about $983-million and that’s dangerously low because the former Liberal government refused to regularly raise premiums.

“They weren’t keeping the rates up to match their cost increases –980-some million– that doesn’t buy you much these days. That needs to be rebuilt because the previous government’s basically destroyed most of it by subsidizing the rates. We might jack the optional rates well before that in September or maybe they’ll delay it to November.”

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McCandless also says the current NDP government’s move to defer a basic insurance rate increase this fall means we can expect a six or seven per cent hike in April.

“They’re running on empty in optional and the needle is down at one-third full on the basic and it will be out of gas by the end of this fiscal. Will it be in the red or not just running on fumes?”

McCandless is also cautioning against raising optional rates this fall because he believes that will make it harder for ICBC to compete with private insurance providers.

“If they don’t be careful, they could be pricing themselves out of the optional market. It’s a balancing act and they’ve got to be very, very careful. I don’t envy them, but they’ve got to do it. Otherwise, ICBC will go insolvent and then, all the costs will wind up on the taxpayer.”

He adds changes already being made by the provincial government are helping, but he believes ICBC needs to be more transparent.

Staff at ICBC have declined comment, but they have released a response via a statement acknowledging the Crown corporation is ‘under serious financial strain.’

They don’t dispute McCandless’s math, however, they say overall reserves of almost $12-billion are ‘more than enough’ to pay out all outstanding claims and they insist ICBC remains on ‘very stable footing.’

They’re also suggesting most financial statements and reports are easily accessible online.