Buffeted by escalating costs for bodily injury claims, ICBC announced Friday it is applying to the B.C. Utilities Commission for a 4.9-per-cent hike in basic insurance rates effective Nov. 1.
The increase would be about $36 a year for an average driver with only basic insurance. However, for the roughly 80 per cent of motorists who purchase ICBC’s full vehicle insurance, the average increase would equate to about $11 a year, or less than $1 a month, according to the corporation’s interim president and CEO Mark Blucher.
That’s because the increase is offset by a decrease of four per cent in the optional premium, due to a downturn in auto crime and the cutting of employee costs.
ICBC eliminated more than 260 jobs late last year, most of them from a management group that ballooned almost 41 per cent from 2007 to 2011, according to a government audit last August.
After the audit, then-CEO Jon Schubert — who earned $486,541 in pay and bonuses in 2011 — resigned.
“No one likes an increase in costs,” Blucher said in an interview. “We’ve been very focused to keep the net increase as small as possible.”
The basic insurance premium may increase because bodily injury costs hit $1.86 billion in 2012, up more than $165 million from the previous year and more than $400 million from five years ago, according to the corporation.
Costs are expected to top an unprecedented $2 billion this year.
Blucher attributed the trend to several factors, including rising litigation and medical costs, distracted driving such as use of cellphones for texting, small crashes and accidents involving pedestrians and cyclists.
He emphasized that optional insurance rates will be lowered by four per cent, mitigating the overall increase. The decrease was possible because of factors such as continued declines in auto thefts as well as a saving of $50 million in administrative costs.
ICBC rates last increased 11.2 per cent for basic coverage in February 2012. Optional rates decreased by six per cent, resulting in an average increase of $27 for the vast majority of vehicle owners at that time.
Noting that customers dislike sharp rate swings in their auto insurance rates, Blucher said ICBC plans to implement a strategy whereby annual rate changes would be limited to 1.5 per cent, up or down.
ICBC will also launch a distracted driver campaign next week, coinciding with increased police surveillance of such drivers.
The National Highway Traffic Safety Administration in the U.S. has reported that the risk of getting into an accident increases by 23 times when text messaging, Blucher said.
The provincial government passed changes to the Motor Vehicle Act effective Jan. 1, 2010, allowing only the use of hands-free cellphones and electronic devices that require only one touch to activate.
“It’s going to take some time, just as drunk driving has, for people to accept that it’s so dangerous … and eliminate the behaviour in vehicles,” Blucher said.
On the issue of rising litigation costs, he said the number of bodily injury claims involving representation by lawyers has increased 25 per cent over the past decade, representing about 5,000 more represented claims over that period.
Brahm Martz, a Vancouver personal injury lawyer, said in response that ICBC must accept the blame for higher legal costs.
“ICBC over the last year has increasingly pushed matters to trial that would have settled in other times, that should settle,” he said, noting other trial lawyers have made similar observations.
“They’re taking harder positions and making it more difficult for people who are injured to settle.”
Martz said he recently won a $1-million court settlement for an injured electrician who was willing to settle for $350,000. The most that ICBC offered was $185,000. Bodily injury claims cover payouts for pain and suffering, future care and lost wages.
“ICBC has decided to push these cases, to lower the expectations of lawyers and their clients,” he said.
“My job is most properly to protect my clients from litigation. They’re already injured, they don’t need to go through a court system. If we can settle the case, great.”
Crashes in the province involving at least one cyclist totalled about 1,300 in 2008, 1,500 in 2011, and 1,400 in 2012.
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