Sound management benefits ICBC customers
Editor, The News:
Tuesday’s editorial about ICBC demands a response (“No break from ICBC despite record profits,” Nov. 13, 2007).
First, one important fact needs to be corrected. The editorial said that rates for optional insurance increased by 3.8 per cent this year. They actually decreased by that amount.
There have been modest increases in rates over the years because of increases in the claims costs. Rates for customers who chose ICBC for both basic and optional insurance have only gone up by an annual average of 1.14 per cent over the past five years - much less than the rate of inflation.
The editorial says rates would be lower if there was more competition. In fact, ICBC competes with other insurance for about half of its business. The reality though is that more than 2.1 million customers choose ICBC’s combination of price, product and service over the competition.
Rates are set to cover anticipated claims costs. ICBC would like nothing better than to see the number and cost of crashes stop rising so that insurance rates would not have to increase.
There are two main reasons ICBC has made money over the past few years. We’ve done a good job managing our operating costs and a good job managing our investments. But everyone is aware of the volatility of the markets and we can’t count on strong investment income every year.
ICBC, like all insurers, is required to maintain a contingency fund that can be built up in good years and drawn down in bad years. ICBC’s financial success is good news for our customers. The contingency fund and the investment income earned from it help keep ICBC’s rates low and stable.
ICBC President and CEO