ICBC said about 68,000 new injury claims were reported from July, 2014 to June, 2015 – about 7,000 more than the preceding 12 months.Getty Images
The Insurance Corp. of British Columbia is seeking a 5.5-per-cent increase to basic auto insurance rates, a jump the province's Transportation Minister describes as disappointing but necessary.
ICBC submitted its basic rate application to the B.C. Utilities Commission on Thursday, saying the increase, which amounts to an average climb of $3.70 per month, is needed to stem the tide of rising injury claims.
But the opposition New Democrats say the basic rate, if approved, will have increased 30 per cent since Premier Christy Clark took office in 2011, while an anti-tax advocate questioned why the province still plans to collect a $160-million dividend from the insurance provider.
Transportation Minister Todd Stone said during a conference call that ICBC initially sought a 6.7-per-cent basic rate increase. He said the province ultimately allowed ICBC to transfer $450-million from its optional service to its basic service. That lowered the rate increase to 5.5 per cent, close to last year's rise of 5.2 per cent, the minister said.
"I'm disappointed that the proposed basic rate increase for this coming year couldn't be lower than 5.5 per cent," Mr. Stone said. "That being said, ICBC is facing some very serious cost pressures as a result of the complexity, frequency and severity of bodily injury claims."
ICBC said in a written statement that the number of injury claims has risen sharply. It said about 68,000 new injury claims were reported from July, 2014, to June, 2015, about 7,000 more than the preceding 12 months.
The statement said the Crown corporation's costs from bodily injury claims topped $2-billion for the first time in 2014, and it expects that figure to climb to $2.3-billion this year.
ICBC added that customers who purchase optional extended third-party liability coverage can expect to pay an additional $1.30 per month.
Mr. Stone noted the 30-per-cent increase over five years refers only to basic insurance rates, not the optional rates, which have previously been cut. He said since 80 to 85 per cent of B.C. motorists have both basic and optional insurance through ICBC, most people will be paying only 13 per cent more than they were five years ago.
Adrian Dix, an NDP MLA, called the rate increase "very substantial."
"[It's] the usual bait and switch," he said in an interview. "'It's going to be 6.7 per cent. Oh, we saved you 1.2 per cent.'"
Jordan Bateman, B.C. director of the Canadian Taxpayers Federation, said "only a government agency would be breaking their arms patting themselves on the back for shaving one point off.
"This is going to be very expensive for a lot of people," he said in an interview. "It's frustrating, because a lot of this money ends up in government general revenue as dividends from ICBC, where essentially ICBC ratepayers are subsidizing overall general taxpayers."
Mr. Stone, when asked about forgoing the $160-million dividend, said it is built into the province's fiscal plan.
"If government was to make the decision to not proceed with that dividend being payable to the government of British Columbia, that would blow a pretty significant hole in the current fiscal plan and would have to be made up in some other fashion," he said. "Government has decided not to do that."
The minister said the dividend is used to deliver health care and education services that British Columbians need.
If the province had made the decision to forgo the dividend, that would have reduced the rate increase only to 5.2 per cent, the minister said.