Investment income up, crashes up
VANCOUVER, Nov. 8 /CNW/ - ICBC has reported strong financial results and
high customer satisfaction scores for the first nine months of 2007. However
there are discouraging numbers on the claims front including increases in the
number and cost of crashes.
To help address concerns about rising claims costs, ICBC continues to
invest in proven road safety programs to reduce the number and severity of
crashes, and to look for ways to make higher-risk drivers more accountable for
the additional costs they represent.
"There are too many injuries and fatalities; and too many families are
affected by the increase in crashes," said Paul Taylor, ICBC's president and
CEO. "More claims, more crashes and higher claims costs ultimately translate
into higher rates. ICBC believes crashes are preventable and that's why we're
focusing on getting bad drivers to either change their behaviour or pay more
for their insurance."
On average this year, for every $1.00 in premium revenue, ICBC's claims
and operating costs have been approximately $1.02. However, rates remain low
and stable as customers continue to benefit from ICBC's strong investment
income. Equity gains and the sale of the Central City development in Surrey
were the primary factors contributing to increased investment income. These
circumstances cannot be counted on every year.
Crashes and claims costs on the rise
- There were 6,000 more crashes in the first nine months of this year
compared to last year - the largest increase in five years. This
contributed to a six per cent increase in the number of claims.
- Increases in the average cost of payouts for customers with injury
claims have continued, although the rate of increase has moderated.
Claims reserves (money set aside for claims which have occurred but
not yet been paid out) are subject to volatility. In 2005 and 2006,
there were negative adjustments for unpaid injury claims totalling
approximately $600 million.
- Increases in the number of crashes and increases in the average cost
of claims put pressure on insurance rates.
Bad driving habits affect everyone's insurance rates
- ICBC invests in road safety because safer roads reduce claims costs
and help keep rates low and stable.
- ICBC makes significant annual investments in road safety. These
initiatives save lives and reduce injuries, and result in financial
savings by lowering claims costs. Examples include support for
enhance police enforcement, road improvements at high-crash
intersections, and public awareness campaigns.
Rate stability continues in 2007
- Rate changes were implemented in May, and for more than half of
customers who choose ICBC, rates in 2007 were the same or lower than
they were in 2004.
- The average premium for optional coverage decreased by $26, or
3.8 per cent.
- The average premium for basic coverage increased by $21, or
3.3 per cent (subject to final approval by the BCUC).
- Over the last five years, the average combined increase in rates has
been about the rate of inflation.
Investment income drives profitability
- Investment income for the first nine months of 2007 was $526 million,
an increase of $142 million compared to last year. The turnaround and
sale of the Central City development contributed $133 million to the
- Net income for the first nine months of 2007 was $513 million, or
$380 million excluding the impact from the sale of the Central City
development in Surrey.
- Operating costs (overhead) remain low - ICBC continues to be a leader
in the industry for low operating costs.
Customer satisfaction targets exceeded
- As of the end of September 2007, all customer satisfaction measures
are better than the annual targets.
- High levels of customer satisfaction were confirmed by an independent
third-party organization. Levels of customer satisfaction for:
- Insurance services 93%
- Claims services 84%
- Driver licensing services 91%
- Customers are continuing to choose ICBC's combination of price,
product and service for their optional coverage. Currently, more than
2.1 million customers have chosen ICBC for their optional insurance.
- BCUC's final decisions on 2007 rates for basic insurance and other
adjustments to the way rates are set are expected by year-end.
- Rates for 2008 will be reviewed after year-end, and any future
changes will be based on forecasted claims costs.
Note: The Statement of Operations for nine months ended September 30, 2007
accompanies this news release at www.icbc.com/inside_icbc/newsroom.asp.
For further information:
For further information: Doug McClelland, (604) 982-2476; Doug
Henderson, (604) 982-1332