Thought of the Day - March 31 2021 - I Was Wrong

Almost a year ago I talked about the rebates that car insurance companies across the country were providing their customers due to the significant reduction in claims during the pandemic ( Thought of the Day - April 21 - Car Insurance Rebates ). At that time I said there was little chance that ICBC would follow suit, the best we could hope for was that they would lose less money in 2020. But I was wrong.

ICBC's fiscal year runs from April to March. At the end of March 2020, when companies across the country started providing rebates, ICBC declared a loss of $376 million for the past fiscal year. However, in the three months following (until the end of June) ICBC made a profit of $311 million, and by September I understand that this figure had grown to a $411 million surplus (ICBC has yet to release their financial report from last summer).

Anyway, it has been announced that around $600 million is to be rebated. Premier John Horgan has said the one-time rebate cheques are "the largest single give-back to policyholders in Canada through COVID-19". Across Canada, the average rebate was 20% in 2020. Given that the average ICBC insurance rate is around $1,850 per vehicle (FYI we pay more than double the Canadian average for car insurance) I guess the average rebate would be about $370 right? Wrong, ICBC says it will be about 19%, but of six months only, so actually 9.5% of your yearly premium (this aligns with $600M being rebated of about $6.4B in premium income collected).

Despite all their problems with "cyber attacks", ICBC are finally sending out rebate cheques (Note, ICBC says "There remains no indication that any information was obtained by unauthorized parties."). A Coquitlam woman just received hers. For $1. That's right. Given it costs most companies about $20 to cut, mail, and process a cheque this means that ICBC has paid $21 to provide her with a cheque that is more valuable as a souvenir of the mess ICBC is in than its face value.

She had two cars insured during the qualifying period of April 1 to Sept. 30, a 1994 Toyota Tacoma and a 2017 GMC Yukon, and pays about $200 a month each for the two vehicles, with a 43% discount. It boggles the mind how the math could arrive at a figure of $1. I had a look online but, unfortunately, ICBC provides no information on how rebates are actually calculated. Just a statement saying rebates will be between $25 and $400. ICBC did respond to her concerns in a Tweet noting that everyone would get a cheque even if it was only $1, a reversal of their historical policy to only rebate people for $5 or more.

When asked, the Solicitor General Mike Farnworth, who is the minister responsible for ICBC, restated "The vast majority of people who insured their vehicles in the early months of the pandemic will see on average a rebate of $190". Therefore, I was thinking that this was a one-off special case, but no. ICBC estimates that "0.2% of cheques will have a value of $1", meaning there are going to be thousands of them. Can't wait to get mine.

Cheers

Cliff