ICBC customers will receive one-time rebates averaging $190 this spring – their part of $600 million that was saved due to a major decrease in crashes and costs as the COVID-19 pandemic took hold.
“Our work to make life more affordable for British Columbians includes fulfilling our commitment to take earnings at ICBC that are related to the pandemic and give that money back to people,” said Premier John Horgan on Tuesday. “Those cheques will be in the mail soon.”
Since the beginning of the 2020-21 fiscal year, ICBC has had fewer reported collisions and lower claim costs, resulting in higher-than-expected income. That gain was partly offset by lower premium revenue due to lapsed and cancelled insurance policies.
“As people’s driving behaviours changed during the pandemic, including staying close to home and off the roads, ICBC’s savings grew,” said Mike Farnworth, Minister of Public Safety and Solicitor General. “After assessing the full benefit of pandemic-related savings against ICBC’s bottom line, we are now set to deliver a significant rebate to millions of B.C. drivers.”
Most customers who had an active policy from April 1 to September 30, 2020, will be eligible, with their rebate amount based on a portion of what they paid for coverage during that period. Exceptions include customers with short-term, storage or distance-based policies, whose premiums already reflect lower usage. The basic insurance portion of the rebate is subject to approval by the BC Utilities Commission.
“Our top priorities during the pandemic have been, first, the health and safety of our customers, employees and business partners – and second, making insurance more affordable,” said Nicolas Jimenez, President and CEO, ICBC. “It’s the choices that our customers made during an unprecedented time that helped our bottom line, and the vast majority of them will now share in that success, through one of the largest COVID-19 rebates by any insurer in Canada.”
ICBC will begin mailing rebate cheques in mid-March 2021. This one-time rebate is separate from the Enhanced Care refunds customers will start to receive in May 2021.
With the product reform made in 2019 and savings from fewer crashes, ICBC is in a strong financial position to issue the COVID-19 rebate in addition to providing customers with lower auto insurance rates through Enhanced Care starting in May 2021, according to the Province.
ICBC’s COVID-19 rebate is based on its net underwriting savings of approximately $600 million during the first six months of its fiscal year (April 1 to September 30, 2020).
ICBC received about 35% fewer crash claims than expected, including fewer injury claims. This was offset by ICBC taking in lower premium revenue as customers made changes to their insurance policies, held off on getting new ones or cancelled them.
The estimated impact of fewer claims is $720 million, while written premium revenue is down $120 million compared to what would normally be received for the period. ICBC estimates the net underwriting savings to be about $600 million.
The rebate is approximately 19% of the premium customers paid for coverage during the six-month period. There are 2.86 million eligible customers with an active policy between April 1 and September 30, 2020. The average refund for non-fleet customers, which represents the majority of this group (2.84 million out of 2.86 million customers), is approximately $190.
In addition to returning $600 million to its customers through a one-time COVID-19 rebate, ICBC has taken a number of steps to help customers during this challenging time, according to the Province.
* temporarily waiving fees associated with cancelling and restarting policies;
* offering payment deferral options; and
* providing a temporary exemption to customers insured for personal use that allowed them to deliver food and medical products.