Canadian Direct challenges proposed ICBC rate hike

Canadian Direct Insurance, a wholly-owned subsidiary ofCanadian Western Bank, says the ICBC’s recent proposed 6.5% increase in mandatory basic auto insurance premiums is an “unsupportable raid on consumers.”An ICBC competitor, Canadian Direct says the BC Utilities Commission (BCUC) should review the government insurer’s proposed rate hike before any action is taken. In late January, according to Canadian Direct, ICBC asked the commission to approve the proposed increase “on an interim basis,” without a public hearing.Colin Brown, the CEO of Canadian Direct, said in a press release: “It’s pretty clear from the first year of dealing with ICBC at the BC Utilities Commission that ICBC interprets its own numbers to support whatever its current business strategy is. Neither the BCUC nor anyone else understands these now-you-see-them, now-you-don’t cost and revenue numbers”The only appropriate action by the BCUC would be to withhold any approval of any ICBC premium changes until the commission has established the facts about ICBC’s finances and requirements. The best way to do that would be by authorizing and paying for an independent study of ICBC’s numbers. Otherwise the BCUC will be abdicating its responsibility to consumers.”According to Brown, the best model for regulating insurers is in Alberta, where he notes the provincial government commissioned in 2004 an independent consultant to study the real costs and revenues of the whole industry. Brown cited several reasons why it would be wrong for the commission to authorize a premium hike for ICBC basic insurance at this time. Among them, he challenged the ICBC’s assertion that claims increases were forcing the insurer to ask for the rate hike.”In both their August and October [2005] filings, ICBC said that insurance rates should stay the same (even though they were falling across the country),” Brown said. “Four months later, using the same database of claims numbers, ICBC changed its interpretation and predicted that claims will rise and [that] it therefore needs an immediate premium increase; this, at a time when premiums are falling all across the country.”The BCUC simply must get to the bottom of ICBC’s costs and revenue requirements before any premium hike – even an interim one – is approved.”