ICBC... Stealth tax?
Aug 31st 2010 | 8:00 am
#31
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Joined: Sep 2003
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From: Upstate South Carolina
Aug 31st 2010 | 8:17 am
#32
Joined: Aug 2005
Posts: 14,227
Re: ICBC... Stealth tax?
Interesting article (extract) from The Tyee:
ICBC seems pretty typical of most insurance companies. But what about those low premiums paid by B.C. drivers? The answer is that ICBC has lower costs than private firms.
Since it enjoys a monopoly on 'basic' automobile insurance in B.C., the Crown corporation does not need to expend large sums on advertising to attract customers. And because it is owned by the B.C. government, ICBC pays neither federal nor provincial taxes (with the exception of insurance-premium taxes to Victoria).
With lower operating costs than private insurers, ICBC therefore has a lower 'operating loss,' and so can charge lower premiums. ICBC's low rates and profitability benefit countless British Columbians.
The average B.C. motorist, according to the Consumers' Association's study, pays $1,324 for insurance annually. That's $390 less than what Albertans pay and a whopping $1,059 less than Ontario drivers. B.C. businesses benefit in two ways: first, their employees' wage and salary demands are dampened by lower-than-market auto-insurance costs; and second, their own fleet insurance and transportation costs are lower than those faced by competitors in other provinces.
The provincial government also benefits from ICBC's profitability. First, because Victoria has adopted generally accepted accounting principles (GAAP), which includes Crown corporations in the province's bottom line, ICBC's retained-earnings reduce B.C.'s total debt. Second, the Crown corporation's annual operating profits help to boost provincial revenues, thereby contributing to a 'balanced' or surplus budget. And third, ICBC collects more than $400 million annually in fines and revenue for the province and operates 'Road Safety programs,' at no cost to Victoria! (The $100 million-plus annual cost of these activities is paid by ICBC.)
http://thetyee.ca/Views/2005/11/03/ICBCSuccess/
ICBC seems pretty typical of most insurance companies. But what about those low premiums paid by B.C. drivers? The answer is that ICBC has lower costs than private firms.
Since it enjoys a monopoly on 'basic' automobile insurance in B.C., the Crown corporation does not need to expend large sums on advertising to attract customers. And because it is owned by the B.C. government, ICBC pays neither federal nor provincial taxes (with the exception of insurance-premium taxes to Victoria).
With lower operating costs than private insurers, ICBC therefore has a lower 'operating loss,' and so can charge lower premiums. ICBC's low rates and profitability benefit countless British Columbians.
The average B.C. motorist, according to the Consumers' Association's study, pays $1,324 for insurance annually. That's $390 less than what Albertans pay and a whopping $1,059 less than Ontario drivers. B.C. businesses benefit in two ways: first, their employees' wage and salary demands are dampened by lower-than-market auto-insurance costs; and second, their own fleet insurance and transportation costs are lower than those faced by competitors in other provinces.
The provincial government also benefits from ICBC's profitability. First, because Victoria has adopted generally accepted accounting principles (GAAP), which includes Crown corporations in the province's bottom line, ICBC's retained-earnings reduce B.C.'s total debt. Second, the Crown corporation's annual operating profits help to boost provincial revenues, thereby contributing to a 'balanced' or surplus budget. And third, ICBC collects more than $400 million annually in fines and revenue for the province and operates 'Road Safety programs,' at no cost to Victoria! (The $100 million-plus annual cost of these activities is paid by ICBC.)
http://thetyee.ca/Views/2005/11/03/ICBCSuccess/
ICBC insurance is no such thing, it's a tax.
Aug 31st 2010 | 8:23 am
#33
Binned by Muderators
Joined: Jul 2007
Posts: 11,708
From: White Rock BC
Re: ICBC... Stealth tax?
http://cope378.ca/icbc-shell-game-al...eneral-revenue
Aug 31st 2010 | 8:44 am
#34
Joined: Aug 2005
Posts: 14,227
Re: ICBC... Stealth tax?
I don't usually quote union spokespeople, but this is one other side of the story.
http://cope378.ca/icbc-shell-game-al...eneral-revenue
http://cope378.ca/icbc-shell-game-al...eneral-revenue
That $500m surplus should be spent improving the roads as the union guy says. Though 'employee investment' is just code for 'pay rises' which is what they actually really want.
Aug 31st 2010 | 9:04 am
#35
Binned by Muderators
Joined: Jul 2007
Posts: 11,708
From: White Rock BC
Re: ICBC... Stealth tax?
It is all very opaque. It seems that ICBC make exactly how much the government of the day want them to make. They may not pay taxes but they do transfer hundreds of millions of dollars to the provincial government every year.
I understand why ICBC came into existence. I hear stories of the what the auto insurance market was like in BC in the 60s and 70s: sky high premiums and private insurers who wouldn't pay out on a timely basis, or at all if they could get away with it. That said, better regulation rather than nationalization (provincilaization ?) of the insurance function would surely have been better.
I understand why ICBC came into existence. I hear stories of the what the auto insurance market was like in BC in the 60s and 70s: sky high premiums and private insurers who wouldn't pay out on a timely basis, or at all if they could get away with it. That said, better regulation rather than nationalization (provincilaization ?) of the insurance function would surely have been better.
Aug 31st 2010 | 9:08 am
#36
Joined: Aug 2005
Posts: 14,227
Re: ICBC... Stealth tax?
It is all very opaque. It seems that ICBC make exactly how much the government of the day want them to make. They may not pay taxes but they do transfer hundreds of millions of dollars to the provincial government every year.
I understand why ICBC came into existence. I hear stories of the what the auto insurance market was like in BC in the 60s and 70s: sky high premiums and private insurers who wouldn't pay out on a timely basis, or at all if they could get away with it. That said, better regulation rather than nationalization (provincilaization ?) of the insurance function would surely have been better.
I understand why ICBC came into existence. I hear stories of the what the auto insurance market was like in BC in the 60s and 70s: sky high premiums and private insurers who wouldn't pay out on a timely basis, or at all if they could get away with it. That said, better regulation rather than nationalization (provincilaization ?) of the insurance function would surely have been better.
Which reminds me, my sticker runs out next week so I'd best do something about it!
Aug 31st 2010 | 9:12 am
#37
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Joined: Sep 2003
Posts: 30,771
From: Upstate South Carolina
Aug 31st 2010 | 10:40 am
#39
Joined: Dec 2008
Posts: 3,054
Re: ICBC... Stealth tax?
ICBC also funds road safety initiatives, such as counter attack. the money was used to pay overtime to cops rather than it coming out of general revenue. They also funded a number of specialized traffic units doing seat belt checks and what have you.
It is indirect taxation but at least its not all going in deep pockets as is the case with private insurance companises
edit - just noted that this thread is from January
It is indirect taxation but at least its not all going in deep pockets as is the case with private insurance companises
edit - just noted that this thread is from January
Sep 1st 2010 | 12:31 am
#40
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Joined: Sep 2003
Posts: 30,771
From: Upstate South Carolina
Re: ICBC... Stealth tax?
That's how insurance rates work... driven by statistics. In canada though its murkier I think because of the way the discrimination legislation is framed.
Sep 1st 2010 | 3:21 am
#41
Pea Brain
Joined: Jun 2005
Posts: 6,005
From: TBD
Re: ICBC... Stealth tax?
Apparently we've been behaving ourselves on the roads in BC recently - ICBC announced a 2.4% rate drop for premiums yesterday:
ICBC to cut basic insurance rates by 2.4%
B.C. Utilities Commission approves rate reduction
ICBC will reduce its basic insurance rates by 2.4% beginning November 1, 2010, following a decision from the British Columbia Utilities Commission (BCUC), which is responsible for regulating basic insurance rates in the province.
"Any reduction in our insurance rates is good news for our customers and we thank them for their smart driving decisions that have made this possible," said Jon Schubert, ICBC's President and CEO. "At a time when the price of everything seems to be going up, ICBC's insurance rates are once again coming down."
In announcing the reduction, the Commission noted that ICBC's operating expenses were, on average, 2.8% lower than forecasted over the past few years. This careful management of operating costs will be passed on to our customers in the form of an additional 0.5% rate reduction on top of the 1.9% in our application.
Rate changes are driven mainly by projected claims costs. Fewer crashes in B.C. have led to a drop in the number of claims; however, the average cost of injury claims, which are covered by basic insurance, continues to rise.
"This rate reduction is a significant development — it's the first time in more than a decade that we have been able to reduce our basic rates," said Schubert. "After years of fiscal restraint, and thanks to our customers safe driving and the hard work of our employees, we are able to further reduce our rates while reinvesting in the business to better serve our customers."
http://www.icbc.com/about-ICBC/news_...leases/aug2010
ICBC to cut basic insurance rates by 2.4%
B.C. Utilities Commission approves rate reduction
ICBC will reduce its basic insurance rates by 2.4% beginning November 1, 2010, following a decision from the British Columbia Utilities Commission (BCUC), which is responsible for regulating basic insurance rates in the province.
"Any reduction in our insurance rates is good news for our customers and we thank them for their smart driving decisions that have made this possible," said Jon Schubert, ICBC's President and CEO. "At a time when the price of everything seems to be going up, ICBC's insurance rates are once again coming down."
In announcing the reduction, the Commission noted that ICBC's operating expenses were, on average, 2.8% lower than forecasted over the past few years. This careful management of operating costs will be passed on to our customers in the form of an additional 0.5% rate reduction on top of the 1.9% in our application.
Rate changes are driven mainly by projected claims costs. Fewer crashes in B.C. have led to a drop in the number of claims; however, the average cost of injury claims, which are covered by basic insurance, continues to rise.
"This rate reduction is a significant development — it's the first time in more than a decade that we have been able to reduce our basic rates," said Schubert. "After years of fiscal restraint, and thanks to our customers safe driving and the hard work of our employees, we are able to further reduce our rates while reinvesting in the business to better serve our customers."
http://www.icbc.com/about-ICBC/news_...leases/aug2010
Sep 1st 2010 | 4:11 am
#42
Binned by Muderators
Joined: Jul 2007
Posts: 11,708
From: White Rock BC
Re: ICBC... Stealth tax?
ICBC will reduce its basic insurance rates by 2.4% beginning November 1, 2010, following a decision from the British Columbia Utilities Commission (BCUC), which is responsible for regulating basic insurance rates in the province.
******!
My renewal is due this month.
Sep 1st 2010 | 5:20 am
#44
Joined: Dec 2008
Posts: 3,054
Re: ICBC... Stealth tax?
Statistically proven to be in more accidents...ask an actuary. I doesnt mean if you are an entertainer that you are bound to have more accidents, but on average entertainers have more accidents, so they all get tarred with the same brush.
That's how insurance rates work... driven by statistics. In canada though its murkier I think because of the way the discrimination legislation is framed.
That's how insurance rates work... driven by statistics. In canada though its murkier I think because of the way the discrimination legislation is framed.
Sep 1st 2010 | 5:38 am
#45
Joined: Aug 2005
Posts: 14,227
Re: ICBC... Stealth tax?
You can make an argument that both systems are fair depending on your criteria. Because I'm in a low risk group, my premium is subsidising those in a high risk group - and I don't think it's very fair. Although, once I stopped treating it as insurance and just accepted that it was a car tax I found it much less annoying.
