Burnaby, British Columbia – The Insurance Corporation of British Columbia (ICBC) expects basic insurance rates to rise in 2012, although optional rates will fall. The majority of customers who purchase their full vehicle insurance coverage with ICBC will probably see an average increase of less than $30 per year.
The expected increase was announced as part of ICBC’s third-quarter financial results. Net income for the first nine months of 2011 was $52, down from $331 million the previous year. Claims costs rose to $2.47 billion, an increase of $200 million over the first nine months of 2011. The increase can be predominantly attributed to bodily injury claims cost, which have grown at a much higher rate than anticipated, ICBC said. Current worldwide economic and capital market conditions have also led to a drop in ICBC’s investment income.
The corporation will provide details on changes to its insurance rates when it files for an increase to its basic insurance rates with the BCUC in the next few days.
“We have seen increasing pressure, in particular from bodily injury costs,” said Jon Schubert, president and CEO of ICBC. “This year, bodily injury costs will be approximately $1.7 billion, $350 million more than five years ago. This increase in costs is not sustainable without a rate increase.”
Schubert added that in previous years, ICBC’s investment income has been strong enough to help keep rates down, “but this is no longer the case and we cannot rely on this income to the same extent as we have in previous years.”
ICBC said it has not increased its rates since 2007 and there have been a number of rate decreases during that time.