The Insurance Corporation of sa国际传媒 says it must raise it rates because it is paying out more in claims than it brings in from basic auto insurance premiums. It鈥檚 asking for a 5.2 per cent increase, following an increase of the same amount in 2013 and a hike of 11.2 per cent in 2012.
But if the sa国际传媒 Liberal government would keep its hands off ICBC鈥檚 cash flow, this raise would not be necessary, or would be much smaller. The government should allow the Crown insurance corporation to operate as it was intended 鈥� to provide fair and affordable auto insurance, not as a revenue-generator for the government.
Granted, the money siphoned from ICBC is used for purposes that ostensibly benefit all British Columbians, but it means drivers pay an unfair share of the costs. The sa国际传媒 Liberals like to brag about not raising taxes, but the premium increase is just a whitewashed tax hike. Also, we pay a 4.4 per cent tax to the province on those premiums 鈥� in effect, a tax on a tax.
Before ICBC was created in 1973, British Columbia was an insurance jungle.
Justice R.A.B. Wootton, appointed by Social Credit premier W.A.C. Bennett to study the practices of the 175 insurance companies operating in sa国际传媒, found that competition was limited. He noted in his 1968 report that there was no compulsory insurance to cover cyclists, pedestrians or passengers in motor vehicles. The lack of compulsory insurance meant innocent victims could be devastated financially. Rates were seen as discriminatory, as they were based on age, sex, marital status, area of residence and other social criteria.
Leading up to the 1972 election, Dave Barrett and the NDP campaigned on a promise of inexpensive public auto insurance. During that election, Bennett warned that the 鈥渟ocialist hordes are at the gate.鈥� But the prospect of lower and consistent insurance premiums helped propel Barrett and his party to victory.
Money flows into insurance companies in the form of premiums and flows out as payment for claims. In the interval between the two transactions, the money is invested. Profits result when the money from premiums and investments exceeds operating expenses and claims payments.
鈥淎 private insurer needs to provide a reasonable return to investors, which is typically generated from its investment portfolio, whereas a public insurer can use this income to pay claims and lower rates for its policyholders or to add to surplus capital to prevent future rate shock,鈥� said the sa国际传媒 branch of the Consumers鈥� Association of sa国际传媒 in a 2013 paper entitled A Consumers鈥� Perspective to Fixing ICBC .
ICBC is profitable, thanks to returns on investments and profits from optional insurance.
But since taking power in 2001, the sa国际传媒 Liberals have consistently helped themselves to the public insurer鈥檚 profits. 鈥淎 public insurer built on creating public value for the motoring public has turned into a cash cow for the province,鈥� says the CAC report.
The money the provincial government has siphoned off 鈥� amounting to hundreds of millions of dollars 鈥� would more than cover the rate increases.
鈥淚CBC as a Crown corporation and as a public insurer was built on the premise of fair rates and service for all British Columbians, regardless of their socio-economic status or their geographic location,鈥� says the consumers鈥� association report.
鈥淭he sa国际传媒 Liberals have rigged the system so that the province鈥檚 share of the benefits from public auto insurance comes at the expense of one group of its citizens 鈥� ICBC policyholders.鈥�
If the province were to stop taking its 鈥渄ividends鈥� from ICBC, the money would have to come from somewhere else, and that would mean raising taxes. But we鈥檙e already paying those taxes as part of higher insurance premiums.
Let鈥檚 stop pretending otherwise.
