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ICBC rate hike will cost average driver $130 per year

Jennifer Saltman

Attorney General David Eby talks about actions taken to address problems with ICBC including an announcement of increases to the basic and optional rates in Vancouver, Sept. 5, 2017. (NICK PROCAYLO/Postmedia Network)

Attorney General David Eby talks about actions taken to address problems with ICBC including an announcement of increases to the basic and optional rates in Vancouver, Sept. 5, 2017. (NICK PROCAYLO/Postmedia Network)

B.C. drivers who get their basic and optional insurance through the Insurance Corp. of B.C. can expect to pay an extra $130 per year as the NDP government boosts insurance rates to deal with serious financial issues at the beleaguered Crown insurer.

At a news conference on Tuesday, B.C. Attorney General David Eby announced that ICBC will apply to the B.C. Utilities Commission for a basic rate increase of 6.4 per cent, or $57 per year ($4.75 per month) for the average driver.

There will also be an increase in the optional extended coverage rate of 3.1 per cent for the first quarter, with quarterly increases of 2.2 per cent to a maximum of 9.6 per cent.

Drivers that have both basic and optional coverage — most drivers, according to Eby — will face a blended rate hike of eight per cent, or $130 annually, on average.

The rate increases will take effect on Nov. 1, subject to the BCUC’s approval of the basic rate hike application.

Last year’s basic rate hike was 4.9 per cent.

Eby said the rate hikes will help ICBC get on track after years of being gutted by successive Liberal governments.

“ICBC is one of British Columbia’s most important assets. That said, there are deep and profound issues at our public insurer that need to be addressed immediately in order to keep rates affordable for British Columbians in the long term,” Eby said. “We need to take drastic action to fix ICBC’s devastating current financial situation.”

The attorney general said British Columbians had been deceived about the true finances of ICBC before the May 9 provincial election.

A report commissioned by the Crown insurance company and prepared by Ernst & Young that was leaked in July warned that B.C. motorists could see vehicle insurance rate hikes of almost 30 per cent in the next two years if the government doesn’t overhaul ICBC’s basic insurance system.

The report suggested measures such as capping payouts for pain and suffering for minor injuries, reintroducing photo radar, upgrading red-light cameras, increasing police efforts to catch distracted and impaired drivers, and making high-risk drivers pay more for insurance.

"Our commitment to British Columbians is to make life more affordable for — forcing 20 per cent rate increases on drivers is a non-starter," Eby said Tuesday. "Our government is working overtime to clean up the mess we inherited in a way that minimizes impacts on drivers."

ICBC premiums are among the highest in Canada, but according to the report “they are not high enough to cover the true cost of paying claims.” Basic rates have long been subsidized by money from the optional coverage side, however the optional insurance business has been dwindling and actually suffered a loss in the 2016/17 fiscal year. The gap between basic premium revenues and claim costs is currently $560 million and the shortfall will hit $1 billion by 2019 if nothing is changed, the report stated.

The report said ICBC is facing unsustainable financial pressures and requires immediate intervention by the provincial government.

On Tuesday, Eby announced a series of short-term measures the government will implement to improve ICBC's operations and reduce accident rates. They include:

• Launching an operational audit of the Crown corporation;

• Moving forward with a pilot project to evaluate distracted driving reduction technology;

•Activating red-light cameras 24 hours a day, seven days a week, up from the current six hours per day;

• Increasing public awareness of the risks of distracted driving through a new advertising campaign; and

• Introducing a dangerous roads initiative to identify and rapidly retrofit infrastructure, regulations and signage at dangerous roads and intersections.

Eby dismissed some of the report’s recommendations, including bringing back photo radar and introducing no-fault insurance, which directs a person involved in an incident to deal with their own insurance company regardless of who is at fault.

In July, Premier John Horgan announced two new appointments to ICBC’s board — former NDP MLA Joy MacPhail as chair and TransLink’s Cathy McLay as a director.

Last week, ICBC was given a two-week extension — until Sept. 15 — to file its rate application for mandatory basic insurance. An interim rate will take effect Nov. 1 while the B.C. Utilities Commission reviews ICBC’s revenue application.

— With files from Rob Shaw and The Canadian Press