Get ready to pay more for your basic car insurance in British Columbia. On Friday the Insurance Corporation of British Columbia (ICBC) will be submitting its rate increase application to the B.C. Utilities Commission (BCUC).
“We have to set new rates for next year and they will be probably be higher than the public wants. But we inherited a billion dollar hole that has become a second-year billion dollar hole at the public insurance company,” B.C. premier John Horgan said Wednesday as part of a year end interview.
ICBC is required to submit rate applications to the BCUC each year.
The public insurer has been struggling to deal with rising costs linked to lawyer fees, increased crashes and fraudulent claims. Last year the company lost $1.3 billion and is expected to lose more than $800 million this fiscal year.
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Last year the rates went up 6.4 per cent on the basic side and up to 9.6 per cent on the optional side. The province estimated the average British Columbian paid an additional $130 per year after the increase were factored in.
Horgan says the government is trying to avoid double digit increases this years.
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“I would hope not. Again I would expect it would be less that that. Certainly there are challenges ahead. The public has been patient with us as a new government,” Horgan said. “We’ve got a challenge at ICBC.”
ICBC is in the midst of a massive overhaul that should bring rate stability to the auto insurance system. Attorney General David Eby is forecasting the changes could save the company $1 billion per year and is hoping future rate increases can be pegged to inflation.
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But the challenge for this year is the changes don’t set in until April 1, 2019 and there will be a heavy burden placed on those tasked with explaining the changes.
“The brokers all across the province need to be trained because they are talking to British Columbians across the province. It is massive and has been done in 16 months,” Eby said. “It should have been done five years ago. But we are getting it done.”
The province is also looking at changing the model where good drivers pay less and bad drivers pay more.
The BC Liberals say British Columbia needs to look around the world to find “a better model.” Leader Andrew Wilkinson says it is time to consider a co-op model, mutual insurance model or even look at privatization for specific markets like the taxi industry.
“In our household we just got a $2,800 bill for a vehicle with a driver with no accidents ever,” Wilkinson said.
“That is really getting out of control. And when we say are you paying too much for auto insurance the answer is probably.”