What’s New: In Brief (May 31, 2007)

With spring flooding being a high risk in certain areas of B.C., the Insurance Bureau of Canada (IBC) is warning people that damage caused by overland flooding cannot be covered by home insurance.”The purpose of insurance is to spread risk amongst many policyholders,” said Lindsay Olson, IBC vice-president, British Columbia and Yukon. “But overland flooding is a risk for only a small percentage of the population – that is, those who live in a flood plain. The result is that flood insurance would be unaffordable.”Olson noted some potential damage from flooding may be the result of sewer back-up. Coverage for this type of damage is available, she said, but must be purchased as an add-on to a homeowner’s policy.”The IBC urges homeowners not to wait until a flood is affecting their area to review their home insurance policy and contact their insurance representative to verify what coverage they have.

The Insurance Corporation of British Columbia (ICBC) reported a successful year in 2006, according to its annual report tabled May 31. IBC reported a 2006 profit of $Cdn350 million and its operating expenses in 2006 were lower than they were in 2005. Of concern to the ICBC is the rising cost of claims that affect rates: mainly basic rates, as basic rates cover roughly three-quarters of the cost of injury claims. To help tackle rising claims costs, ICBC invested roughly Cdn$48 million in 2006 to loss management initiatives aimed at reducing crashes, auto crime and fraud. For about 50% of motorists who purchase both basic and optional insurance from ICBC, the rates will stay about the same as 2006. ICBC has said it intends to implement higher rates for high-risk drivers next year, due to a link between high risk driving and increased crashes.