Jon Schubert, CEO, ICBC

“If you’re a monopoly,” says Schubert, “you’d better be better than everybody else.”

Jon Schubert talks about ICBC’s captive market of 2.5 million motorists, its workforce of 5,000, and $3.2 billion in capital. (Return to B.C.’s Top 100 of 2011.)


Part of Jon Schubert’s job as the head of ICBC, Canada’s biggest auto insurance company, is to worry about the rain. It was a wet winter, and that means slick roads and more accidents, and that translates into more claims and more pressure on the bottom line. 


Schubert has other things to worry about, too. Canada’s overall economy is picking up, and that means more commuting, more accidents and more claims. Plus, bodily injury claims go up about six per cent a year. And when you insure more than three million vehicles, as ICBC does, that means a whole lot of exposure.


Schubert says this is where ICBC’s quasi-monopoly position provides an advantage by creating an economy of scale. A captive market of 2.5 million motorists means ICBC can hold premiums down. Last year, in fact, ICBC reduced basic and optional rates by more than two per cent, an $80-million saving to the public. Of course, there’s also a downside to bigness: “I tell my staff, if you’re a monopoly or a semi-monopoly, you’d better be better than everybody else,” Schubert says. “Because if you’re not, you’re done.”


To that end, ICBC is in the midst of an intensive overhaul, called the 2014 Strategy, to modernize its operations and make customers happier. “Some of our systems are from the 1970s,” says Schubert. “For example, we only got rid of microfiche last year.” So the first step is to go digital. The corporation will also be revamping its claims system, to make it faster and more efficient. There will be less paperwork, and through an initiative dubbed Click, Call or Visit, customers will have more ways of accessing ICBC staff.


At the same time, Schubert says ICBC is endeavouring to fine-tune its risk assessment systems so that good drivers pay less and high-risk drivers pay more. This was something Schubert kept hearing over and over again in focus groups: safe drivers feel they’re not rewarded enough for their accident-free records. “We’re also looking at ways of giving people the opportunity to take their cars directly to the repair shop, rather than to us, and we guarantee the shop,” he adds.


Schubert says ICBC will be able to finance this five-year modernization program without layoffs or service cutbacks. Ten years ago, the corporation had almost no capital; today it has $3.2 billion. “We’re very very strong financially,” he says. Strong enough to fund Strategy 2014 and protect its workforce of 5,000. “If you compare it to a home renovation, we saved the money before we started.”


Of course, Schubert, a Saskatchewan native with 35 years in the insurance business, knows all about the vagaries of his industry – the tyranny of the “unforeseens.” Apart from wet weather, there are a host of things that can undermine an insurer’s financial position: inflation, natural disasters, instability of the investment markets (ICBC has a $12-billion investment portfolio) and the inevitable increases in bodily injury awards.


They all foster a sense of fiscal caution, if not conservatism. “The company has worked a long time to get this position,” says Schubert, “and we guard it jealously.” The challenge now is to convince the driving public that they’re getting the best value for their premium dollars, even as ICBC protects its capital. One more thing for Jon Schubert to worry about.