Government of British Columbia - Open Cabinet
The Premier News Search Reports & Publications Contacts


Click here for full cabinet submission Adobe Acrobat (PDF - 96 kb)

Ministry Document Number: ___
Draft Number: ___
Copy Number: ___


The Honourable Gary Collins, Minister of Finance and Minister Responsible for ICBC



October 23, 2001


ICBC's 2002 Autoplan Rate and Product Changes


  • As evidenced by rate increases in other jurisdictions, insurers across Canada are currently facing the need to increase rates to cover increasing costs. Similarly, ICBC's premium revenue is projected to be insufficient to cover costs in 2002 - partly as a result of the six-year rate freeze.

  • In recent years, short term impacts of unusual investment returns and favourable adjustments from settling prior years' claims have resulted in ICBC realizing profits, despite its structural deficit situation. These positive impacts will no longer be available and losses of $145 million and $127 million are forecast for 2001 and 2002 respectively.

  • ICBC's road safety programs and claims cost control strategies have also helped to keep claims costs down in recent years. Administrative and operating expenses, which increased from 1996-2000 with the implementation of these programs and addition of Motor Vehicle Branch functions, are being reduced. While these efforts will continue, they will not be sufficient to prevent the forecast loss in 2002.

  • After a six year freeze, rate changes are the only short-term tool currently available to prevent such future losses.

Business Principles

  • ICBC's recommended plan of action is based on the following guiding business principles:
    1. Break-even business operation;
    2. Basic and Optional lines of business are each self-sustaining; and
    3. No subsidization within lines of business.

Linkage to Government Priorities

  • This submission on rate and product changes is independent of the Board of Directors' core services review of ICBC and the auto insurance industry, which will be brought forward in December 2001. It is being presented now to prevent forecast losses in 2002. There will be no material effect on future changes resulting from the core services review. On the contrary, a more financially sound Corporation will enable better flexibility to respond to future changes.

  • A delay in the rate changes would mean continuing losses in 2002 and additional impacts in 2003 - the total impact in both years is approximately $34 million for a delay of 2 months and $105 million for a 6 month delay.

  • This proposal neither increases nor decreases the regulatory burden as measured by the number of requirements in regulation or policy.


  • It is recommended that Cabinet approve the following changes included in the attached OIC, effective November 19, 2001 for new policies and January 1, 2002 for renewal policies.

    1. Premiums:

    • Increase insurance premiums for both private passenger and commercial policyholders by an average of 7.4%, comprising:
Coverage Premium Increase
Basic insurance 6.6%
Optional insurance 8.7%
    • Changes to premiums for various other optional coverages will also be made, including a 100% increase in optional premiums for snowmobiles and snow vehicles to address high loss ratios.

2. Deductibles and Other Product Changes

    • Increase minimum deductibles for Collision, Comprehensive and Specified Perils claims (optional coverage), for unidentified motorist claims, and for optional coverage for snowmobiles and snow vehicles. Changes to address deteriorating loss ratios for the Rental Vehicle Policy and Loss of Use coverage for limousines are also proposed.

3. Rating Inequities

    • On a revenue-neutral basis, specific premiums for territory, vehicle use and type of vehicle will either be increased or decreased, depending on the relative risk that customers represent.


  • ICBC's current financial forecast indicates an estimated loss of $145 million for 2001, as well as an estimated loss of $127 million for 2002 (notwithstanding potential variability in claims costs).

  • The financial impact of ICBC's proposed premium changes is approximately $180 million on a policy year basis and would move the Corporation towards the break-even level with a projected bottomline of an estimated $8 million loss for 2002 (notwithstanding potential variability in claims costs).


  • Of ICBC's total 2.6 million policyholders, approximately 58% of all ICBC policyholders (approximately 1.5 million) will receive a rate increase between $0 and $100, while approximately 18% (approximately 484,000) will receive a decrease of up to $100. Approximately 22% of all policyholders (approximately 589,000) will receive a rate increase between $100 and $500.

  • Groups of customers with high loss ratios will pay significantly more than the average rate increase, including commercial vehicles such as light and heavy delivery vehicles, taxis and limousines, and public buses; snowmobiles and snow vehicles; and luxury and sport vehicles.

Legislation Required

  • ICBC's rates for Basic coverage and product descriptions for both Basic and Optional coverages are set out in the Insurance (Motor Vehicle) Act Regulation, so the changes included in the attached OIC require Cabinet approval. Regulatory change is not required for Optional premiums and deductibles (still outlined in this submission for completeness).


  • ICBC's rate and product changes are based on business principles and no specific consultation has been carried out with the public.

  • ICBC will provide information to ministries that interact with affected stakeholder groups prior to public communication of these changes.


The Honourable Gary Collins
Minister Responsible for ICBC


Cindy Brown, Corporate and Government Relations, (250) 978-4901

Click here for full cabinet submission Adobe Acrobat (PDF - 96 kb)


FeedbackPrivacyDisclaimerCopyrightTopGovernment of British Columbia