B4 - Sunday, January 1, 1984 - North Shore News Wl business ICBC CUTS FINANCING Banks give less interest THE INSURANCE Corporation of .B.C.’s deci- sion to eliminate premium financing for motorists January | shouldn’t prove a financial hardship for those who previously used the plan, according to spokesmen for B.C. financial institutions. In fact, said regional marketing manager Dave Waterman of the Canadian Imperial Bank of Commerce, motorists who are required to take out loans to cover in- surance costs will fare better at banks because of lower i in- terest rates. Last year, about 300,000 people, or 14 per cent of the province’s two million policy holders used the Insurance Corporations premium financing plan, which enabl- ed those without ready cash to pay over a period of three months. That option, which ICBC announced would not be available in 1984 as part of its overall plan to reduce Operating costs at the crown corporation, will mean that lending institutions could have applications for up to $100 million jn the next one- year period. — In 1983, interest rates charged by ICBC to those us- ing the plan ran at 21 per cent. Waterman, however, noted that banks and credit unions charge considerably less — between 11 and 15 per cent -—- depending on the. prime rate and the terms of the Joan. For those who decide to chalk it up on their credit cards, interest rates charged would be 18 per cent. Although Waterman said he doesn't envision any pro- blems in accommodating. those strapped for cash when their car insurance is due, he - - did admit that any bank loan. is more difficult to obtain than the financing that was offered through ICBC. (Under the old plan, no financial questions were ask- ed of policy holders, who. were simply requested to leave the required number of - post-dated cheques in lieu of immediate payment). Waterman said the first thing banks would look at when processing a loan is the applicant’s assets, current debts and employment record. , He said that, ‘‘probably almost everyone would qualify for a loan,’’ given that the $280 average premium paid in 1983 isn’t regarded by banks as a significant credit risk. Like the Commerce, the Bank of Montreal has not made specific arrangements for loans to ICBC customers. That bank’s head loans of- ficer, Barb Innes, echoed Waterman’s sentiment that loans shouldn't bedifficult to obtain, but noted that those with bad credit ratings would probably be rejected, as-did a spokesman at the -Bank of British Columbia’s head of- in Vancouver. ICBC vice-president of finance and planning Bob Power admitted that while the change in policy might cause a few problems to some policy holders, the bottom line is an attempt to reduce insurance costs for motorists . throughout the province. ‘*Part of me regrets this happening, but we have to bite this bullet and recognize that while it may incon- venience people, the overall net saving will be $2 per per- n,’” said Power. MAILBOX RENTA.LS oF ONSOALE MORTH VAN 63) i ype WEST pv oN 980 4548 -A.E. LEPAGE Mn REAL ESTATE SERVICES LTD © REALTOR REAL ESTATE TRAINING How’ successful you are of Can be as a real estate sales person depends greatly on the company that ts behind you Ensure your success by working for a company that offers the essential backup services, is Nationwide and that will give you the personalized attention and training you need CONSIDER A.E. LePAGE 1 Training ts carned out through instruction by full ime professional educators at our training Centre as well as additional practical field training by the branch managers 2 The Manager does not sell ne is there to assist you 3 AE LePage is Canada s largest real estate Company You deserve the bes! opponunity to be successtul AE LePage ts offering you that opportunity (nterested” Then we want to talk to you CALL TODAY NORTH VAN Chuck Traunweiser 985-9544 He said the 21 per cent in- terest rate charged those us- ing the policy didn’t begin to cover the administrative costs, and was essentially borne by those who pay in- surance premiums up front. He added that to break even on. the financing, the cor- poration would have had to charge the astronomical in- terest rate of about 35 per t. . An ICBC estimate of lost investment revenue as a result of the financing plan sets 1983’s figure-at $3.3 million. And with ICBC paying out an average of $2 million in claims every working day of the year, continuing the plan was not seen as economically viable. He added that by eliminating the plan, the cor- poration can maintain costs and ensure that insurance rates are not raised beyond the six per cent increase slated for 1984. Along with the axing of the policy, about 30 jobs will be cut at the head office in CANADIAN GAS Associa- tion Statistics show that Canada produces millions of cubic metres of natural gas each year, exceeding the amount consumed domesti- Wednesday edition: All advertisers’ copy to the News by Friday 4:00 p.m. Year ~ “The new dealllines will be easy to remember edneeday for Sunday - Priday for Wednesday Tim Francis Advertising Director cconmascpentherenseshebunl sunday news north shore news Canada produces more gas than it uses DEADLINE New Display Advertising Deadlines start January 1984. “Ou aim with all display advertisers is to make ads that sell and ‘© provide high quality service by our sales representatives, our ad traffickers. and our dispatchers ~ “To help us produce effective advertising and to provide better service we will bring our deadlines forward beginning in the New 1139 Lonsdale Avenue, North Vancouver, (604) 980-0511 North Vancouver. However, Power noted that the majori- ty of those who worked in the premium financing depart- ment will be transferred to other departments, while other jobs will be lost through attrition. Another policy which | ICBC has recently introduced is one to deal with those who owe the corporation money and have been resistant to Pay up. Power explained that motorists who fail to make payments on existing debts will have their first party'col- lision coverage ‘cancelled, or, if there is a balance of the premium left on the in- surance policy, that money will be used to cover the ow- ing amount. He said the program, which began in mid-October, is designed to deal with a maximum of 200 debtors a month, and the target is to collect $400,000 in bad‘ debts in the first year of the program. cally. The extra gas produced is exported to the United States and in 1982, the value of these exports was nearly $5 billion, second only to the ex- Sprea . ard She rn Gg . a new approach By A.J. ALBERTI FOR MOST investors, the decision to enter into a com- modity futures transaction revolves around the question of whether to buy or sell. Few realize that handsome profits - ‘will frequently be returned to those who decide to both buy - and sell. This is the trading ,) strategy called spreading, and ~ although there is nothing in- ordinately complicated about the technique, many traders lack familiarity or wunder- standing of the concepts involved. In commodity parlance, a - spread is the simultaneous purchase of one futures con- tract and sale of another. The . underlying principle is that there are’ certain ordifiary relationships that exist among futures prices, but these relationships are sub- ject to change as market forces change. Spread trading is more concerned with the shift of price dif- ferences than with .absolute * price direction. © ' One reason for trading spreads is that sometimes op- portunities appear in spreads even when none can perceived in outright posi- tions. Another consideration is that margin requirements are generally lower for spreads than for long or short port value of pulp and paper. Sunday edition: Wednesday 4:00 pm M1822" Syaterns 1! “BMI87-4 2 Business -nizat 3°" Law 1. “4° BM253-3 © Labour Finlations ‘ BM267-5 ‘Business Finance - BM160-2 ‘Marketing ’ -BM222-2 Microcomputer Applications . BMeI07 ‘Gmat Business BMITS-4, “Qunaive Braneitee). “intra to Canadian only positions, because of the reduced volatility. spreads usually exhibit. Thus, the risk/reward ratio is frequent- ly better for spreads than for outright -positions. Spreads also provide @ measure of " protection against sudden ex- treme losses resulting from a numiber of adverse limit moves, since the kind of sur- }prise that generates such moves (eg. government in- tervention, weather-related crop damage) tends to affect all contracts approximately equally. Spread. trading can sometimes provide another, often overlooked, benefit to the astute investor. Spreads will frequently. predict or confirm a significant direc- tional move in a commodity’s price by..turning- bullish or bearish at or before the beginning of an up or down trend in that commodity. The decision ‘to spread or to take an outright position will be made by the knowledgeable futures trader based on his assessment of the probability of profit. But the possibilities afforded by spread trading should be in- vestigated by any investor seeking an edge in dealing with this market. (A. J. Alberti is a Com- -modities Broker in McLeod ‘Young Weir’s Eaton Centre ; Offi ce in Toronto.) 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