A review of ICBC’s financial situation since the start of the provincial state of emergency shows both positive and negative financial impacts on the insurer’s bottom line, BC Attorney General David Eby said on Thursday.
And with “almost no capital reserves to withstand fluctuations and volatility” in the markets, Eby said it is “too early” to determine whether the pandemic will result in benefits to pass on to drivers.
“ICBC is in a challenging position due to the pandemic, faced with uncertain and unprecedented turmoil in the markets, combined with no financial buffer as a result of the old government’s mismanagement,” said Eby. “There are more than 10 months to go in the fiscal year and many unknowns, but if ICBC’s bottom line ends up better than expected, any surplus will be used to benefit BC drivers.”
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In the meantime, said Eby, “we’re focused on supporting people through payment deferrals and making it easier for people to cancel or change their insurance, and on bringing in Enhanced Care coverage next year to save people an average of $400 on their insurance.”
Eby stressed that if ICBC’s net income results are better than forecast for 2020-21, any additional net income will benefit customers, and any decisions on the use of additional net income of ICBC for the year due to lower claims resulting from the pandemic will be made at the end of the fiscal year. Options could include rebuilding the financial capital health of ICBC to reduce longer-term pressure on rates, providing a one-time direct relief to customers or any combination thereof.
ICBC’s report on the impacts of COVID-19 examined a period of about six weeks after the provincial state of emergency was declared and people were advised to stay home (March 15 to May 2). It found that over that time, ICBC opened 46% fewer accident claims (including claims for both damages to vehicles and for injuries) compared to the same time last year, with an average weekly reduction of 7,200 claims. This drop in the number of claims amounts to approximately $158 million in savings for ICBC.
The report also found that over 150,000 customers changed their insurance policies by cancelling their policy, or lowering their rate class, resulting in a projected $283-million decline in written insurance premiums compared to what would normally be received for that period.
ICBC has also seen a decrease in the value of its investment portfolio due to the unprecedented downturn in the financial markets, putting pressure on its bottom line, said Eby.
“ICBC waiving cancellation and re-plating fees alone during the pandemic has saved customers around $5 million, and we will continue to work with those drivers facing financial hardship,” said ICBC president and CEO Nicolas Jimenez. “We’re committed to delivering essential services and ensuring the safety of our customers, employees and partners.”
And given these “uncertain times,” he continued, “we have a responsibility to consider many factors when making long-term decisions that could adversely affect ICBC’s bottom line — and customers’ insurance premiums — in the future.”