In a review of ICBC’s financial situation due to the COVID-19 pandemic, both negative and positive impacts on the insurance company’s bottom line have been found.
The Province said that because ICBC has almost no capital reserves to withstand market volatility and fluctuations, it is too early to determine whether the pandemic will result in any 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 David Eby, Attorney General. “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 B.C. drivers. In the meantime, 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.”
The B.C. Government said any additional income will be passed onto divers, but only if ICBC’s net results are better than its 2020-2021 forecast.
“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,” said the Provincial Government.
ICBC examined the impacts of COVID-19 since the state of emergency was declared and people were advised to stay at home starting from March 15th to May 2nd. So far, it has found that a number of statistics have changed.
- A 46% reduction in both vehicle damage and injury claims, resulting in approximately $158 million in savings for ICBC. However, claim numbers are expected to rise again as more drivers return to the roads.
- More than 150,000 customers changed their insurance policy, resulting in a $283-million decline in written insurance premiums, as estimated by ICBC. 103,700 people cancelled their policies altogether, while 57,561 customers lowered their rate class.
- Decreased value in its investment portfolio, as early indications suggest the impact could exceed $1 billion in the 2020-21 fiscal year, depending on the length and scope of the global market downturn.
“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 Nicolas Jimenez, ICBC president and CEO. “We’re committed to delivering essential services and ensuring the safety of our customers, employees and partners. And given these uncertain times, 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.”
The B.C. government said that ICBC will remain committed to its long-term goal of implementing enhanced care coverage and lowering rates by an average of 20% in 2021, should the legislation pass.