B.C. drivers can expect a new rebate on their auto insurance starting in March, Premier John Horgan announced Tuesday.
ICBC announced it will return to drivers around $600 million in saved during the pandemic, due to fewer drivers on the road causing fewer crashes.
That amounts to a one-time average of $190 cheque per insurance policy, according to ICBC, though the amount could also vary from a low of $25 to a high of $400 depending on the type of insurance purchased.
Customers won’t have to apply, but they must have had a policy between April 1 and Sept. 30 last year in order to receive the money.
An estimated 2.86 million customers are eligible for the rebate.
The NDP government had promised an ICBC COVID-19 insurance rebate in October’s provincial election campaign.
It’s faced criticism since then for taking so long to launch the rebate, compared to insurers in some other provinces. But Horgan said Tuesday that’s because his government was also working on ICBC’s shift to no-fault insurance, which it calls Enhanced Care, in May.
“We have delayed until now and the cheques won’t be issued until the beginning to the mid of March,” said Horgan.
“But we wanted to make absolutely sure that we were keeping ICBC on sound financial footing as we build the Enhanced Care model that we have been working on for the past three years.”
The $600-million rebate won’t hurt ICBC’s financial position, according to Nicolas Jimenez, the corporation’s president and chief executive officer.
“We are now in a position where we feel more confident that releasing $600 million … is the prudent and fair thing to do for our customers,” he said.
However, it’s not clear exactly what ICBC’s current financial picture looks like, because the Crown auto insurer did not release is second quarter financial results last year due to the pandemic.
ICBC has lost more than $2.5 billion in the past few years, from rising claims and legal costs.
Jimenez provided assurances Tuesday that “we are headed in the right direction” with the shift to no-fault, and the corporation can still afford to return $600 million to drivers as promised by government.
“We are doing that in a prudent manner,” said Horgan.
“We would not, based on the three year track record that we have had in government, put at risk the progress that drivers have made and we have made to ensure we keep rates down over the long term.
“It wasn’t reckless at all and it wasn’t done without consulting with Nicolas and his team to make sure we are in a position to return these dollars to the people who paid them and did not claim anything as a result and also keep the company on the right track.
“We are very confident that is the case.”
ICBC has warned repeatedly in recent years that its capital reserves are exhausted and it can no longer meet the “minimum capital test” set by the federal government to ensure an insurance company is solvent and could pay out its claims in an emergency.
The insurance corporation is supposed to maintain a minimum capital test of 150 per cent, but the rate fell to as low as -30 per cent last year, raising concern that they might require a bailout from the provincial government.
ICBC would not provide a new estimate Tuesday of how its capital reserves are affected by the $600 million rebate.
ICBC CEO Jimenez says corp can afford the $600m COVID rebates and still turn a profit this year. Based on Q2 results for ICBC (which are not public) and the Q3 results (which are also not public). Says details “will be soon” and “heading in the right direction.”
— Rob Shaw (@RobShaw_BC) February 2, 2021