Report is great opportunity for ICBC to bring in reforms

Report is great opportunity for ICBC to bring in reforms | Insurance Business

Report is great opportunity for ICBC to bring in reforms
The Insurance Corporation of British Columbia (ICBC) was thrust into the limelight this week after a leaked Ernst and Young (EY) report suggested British Columbia (BC) auto insurance rates would have to surge by nearly 30% to balance out the corporation’s struggling books.

A copy of the EY report was obtained by Postmedia News, which disclosed its details to the public on Monday (July 24). This was followed by an onslaught of damning media coverage and speculation over what would happen to the already-pricey auto insurance industry in the western province.

But there is no need for such negativity, according to Chuck Byrne, executive director and COO at the Insurance Brokers Association of British Columbia (IBABC). He told Insurance Business the EY report is “exceptionally accurate, well-written, and very true to the issues” and that the IBABC looks forward to some of the recommendations in the report being implemented.

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The report suggests ICBC is in dire financial straits due to a horrendous trend in road accidents in the province. In the past couple of years, the number of accidents and claims has spiked and so has the cost of vehicle repair and human recovery. This is costing the corporation a great deal of money and is a trend it must now try to kerb.

“Even if ICBC had a crystal ball for this situation and increased rates alongside accident trends, it still would have been a difficult problem,” explained Byrne. “No matter how much rate and premium you throw at the problem, that will never be the definitive solution. It comes down to behavioural change and product reform.”

The actuarial status in the EY report suggests a 30% jump would be required to meet the gap in pricing versus outgo on expenses and claims. According to Byrne, that substantial hike is very unlikely to happen as the BC governments, past and present, have vowed to sustain the affordability of insurance.

But while the BC government and the ICBC can work on product reform and rates, it is up to society to address its problematic driving behaviours – and this is something brokers can help with.

“BC brokers are well in tune with the consumer needs for coverage, the complexities and nuances of the ICBC system and the coverages in BC that are available. They do a great job in advocating and briefing the client in that regard,” said Byrne. “Brokers need to be explaining what the media is covering and educating clients about the decisions made by the Government and ICBC.”

The EY report has suggested a number of solutions that, if implemented in a balanced way, could help to address the issues with the auto insurance industry in the province. One task is to change high-risk driver behaviour. Some systems are far more punitive than BC and therefore encounter fewer reckless drivers.

As well as addressing driver behaviour, the report suggests product reform and redesign to make it more efficient, and short-term solutions like tightening up the forgiveness rules for supposed good drivers having accidents.

“The forgiveness rules are too liberal in BC. They need to be tightened up,” commented Byrne. “But we can’t just pick one of the solutions in the report. We need to get the balance right.”

There is a positive from this situation, according to Byrne. He said: “The ICBC system has really proven its value in a number of ways throughout the years and though the system needs some tweaks right now, that’s really no different to any other jurisdiction in western civilization. It’s just BC’s time and whether this could have been started years ago or not, that’s not the issue.

“Now’s the time to make change happen and IBABC is pretty confident that ICBC will get the sustainability fixed to bring about better affordability on pricing and a more efficient system for the claimants and the victims and that’s good news all around. We’re positive about it and are looking forward to the changes.”  

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  • reality 2017-07-27 3:56:20 PM
    ICBC simply needs to follow the costs. That is to say at the extreme end exotic cars should be charged significantly more as even a minor fender bender will cost a small fortune. ICBC only charges somewhat more but that will not nearly make up the costs. At the normal end most cars cost far more to repair minor damage. I recently read an article in a car forum that had teh actual costs to repair various standard vehcilices such as a honda civi front bumper. Over the last 10 years costs have cone up form a few hunded to 2 000+ due to all of the sensors we have on even quite basic cars. I would suggest while rates have come up slightly that my insurance rates have not at all kept up with such a trend. And this puts aside any actual increase in accident frequency. If those are also happening as the leaked report suggests then ICBC is being hit from both sides.
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  • Frustrated in BC 2017-07-28 3:57:39 PM
    There needs to be some accountability from the car manufacturers and the collision repair industries. The cars have become so delicate over the years and repair cost are extremely expensive. This has been creeping towards this crisis since the 50's. How many times dis you have to replace a chrome and rubber fender when you were tapped while parallel parking? ZERO. You just banged out the dent and got on with it. Now you have to have an entire paint job (who would put paint on a bumper in the first place?) at the least and a complete bumper change in the first place? This is costing thousands of dollars insurers and to the general public. Replace a side window...$300 and up...Replace a windscreen? $700 and up? Half the accidents that would have constituted minor repairs are write offs now. In addition the resale value of your car drops like a lead balloon if it repaired at all. I have the solution. Cars should go back to being cars. Now add to that all of the under skilled drivers...why do we need to have a parallel parking assist in our cars...BECAUSE SOME DRIVERS CAN'T PARALLEL PARK. Really? Isn't that a mandatory function that you have to master before you get a license? How about smart warnings when you change lanes...really? Are SHOULDER CHECKS not mandatory? ABS braking? Learn to pump your breaks, people, for goodness sake. All of this technology being added to cars is making people LAZY. Then we ask why is their distracted Driving?? Come on now. It's okay to add a computer screen right in the middle of the dash? Complicated stereo's? Hands free calling? DVD screens in the car to entertain misbehaved children? Mirrors in the drivers shade to use for make up? And now we get to the "Smart Phones" that everyone carries to me in constant contact with work, clients, family and friends. How many times have you receive a work related text or email while out of the office...we all have to take responsibility for distracting people. I have the solution. Cars should go back to being cars. And lastly, there are too many people on the roads at one time. This is driven by greed. The greed of the real-estate industry and the business models. The vast majority of jobs are in downtown Vancouver. The highest cost of living is in downtown and anywhere closest to the jobs. The affluent workers get to live there and everyone else has to live somewhere else, farther out, commuting back in. No where is this a bigger problem than in BC where land is scarce unless you move east. Water, mountains and a national border restrict the growth to move east from Vancouver and the growth in Vancouver is only going up...just like the costs. You don't see 45 story apartment blocks in Drumheller, AB. I have the solution Stop building up. Stop putting all the business downtown. But then who would make more money on real estate?
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