ICBC president and CEO Nicolas Jimenez. (Black Press File photo)

‘They were out of date’: ICBC president says company is trying to correct stale rate model

Nicolas Jimenez gave a presentation to council on Feb. 11

Nicolas Jimenez isn’t trying to cover it up.

According to the Insurance Corporation of British Columbia (ICBC) CEO, a number of recent changes the Crown corporation has implemented with regard to how insurance rates are calculated reflect much-needed updates to an old insurance model.

“They were out of date, they were largely predicated — until we made the change — on a view of the world that represented 2007.”

Jimenez was recently in Smithers at the Town’s Feb. 11 council meeting to provide an update on how ICBC is trying to reduce the rates drivers (especially safe ones) pay in rural areas like the Bulkley Valley.

READ MORE: Smithers Council asks ICBC to come up and answer questions

The ICBC president made the trip up to Smithers after a number of submissions to council by former Telkwa mayor Darcy Repen, who began a freedom of information (FOI) campaign into the disparities between total premium and claim costs for rural and urban postal codes and whether the former is subsidizing a disproportionate amount of claims for the latter.

He told council the changes made by ICBC reflect a concerted effort to make car insurance work for more people in the province.

“In 2017 it was recognized by the government that we had a bit of a crisis,” he said. “Auto insurance was costing about a billion dollars more than we were collecting in premiums to pay for them so this was clearly unsustainable.”

Jimenez said the result was a complete revamping of costing for insurance policies, including things like a financial cap on pain and suffering for minor issues and working to invest in road safety. Jimenez spent most of his time discussing rate design, the main purview of Repen’s FOI.

He said the company spent over a year trying to design a system that would fix some of its chronic problems, once again acknowledging the territorial system needed a revamp.

“We needed to recognize that changes can occur [in] communities so that the territory component of having set premiums was woefully out of date, so to was how you used the vehicle.”

Jimenez said changes to how ICBC calculates territorial rates, which took effect in September 2019, will reduce the average driver’s premiums relative to that factor by 35 per cent.

The decrease is independent from things like high-risk drivers and only applies to the territorial component of how insurance is calculated.

While he acknowledged it wasn’t perfect, Jimenez said the new system is being taken from a utilitarian approach that works for most and will reward things like safe driving or people who use their cars relatively less than others.

But as he explained, restructuring doesn’t mean less overall payments into ICBC.

“In order to return premium to those who are safer without shrinking the pie you have to re-portion that risk to people who present higher risk,” he said.

“Many drivers they’ve been pleasantly surprised when they renewed and for many drivers they’ve been … upset because they’ve been experiencing significant increases in what they have to pay.”

He said ICBC is committed to providing British Columbians with an affordable system.

Recently the Crown corporation announced a number of additional reforms to their system, including regulatory changes to help those in accidents resolve their claims quicker.

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