The Government of British Columbia has directed ICBC to put forward changes that will improve fairness in how basic insurance is calculated.

On approval by the B.C. Utilities Commission (BCUC), effective September 2019, basic insurance premiums will be calculated using the following:

• Drivers: years of driving experience and number of at-fault crashes for all drivers using the vehicle.
• Vehicle: updated information for rate class (how the vehicle is used) and territory (where the driver lives).
• Discounts and add-ons: additional premium considerations, such as a seniors discount or add-on for unlisted drivers.

Earlier this year, almost 35,000 British Columbians provided feedback through a public engagement on some of the proposed changes. That feedback helped finalize the changes summarized below, which will be put forward to the BCUC by Aug. 15, 2018. The BCUC will then have 45 days to approve the application, which will be based on the factors, criteria and guidelines set out in government’s direction letter to ICBC.

1. Drivers

Significant changes are being proposed to increase driver accountability. Under the proposed changes, at-fault crashes would follow the driver. This means in the future, if another driver causes a crash in a vehicle, the claim would now be attached to their driving record, not the owner of the vehicle. In the current system, the owner of the vehicle is held accountable even if they did not cause the crash.

List all drivers
Under the proposed changes, customers will be asked to list all the drivers who may operate the vehicle. The experience and crash history of each driver would be taken into consideration when setting the premiums.

In the current model, only the principle operator is required to be listed, which means the true risk of the vehicle is unknown. About 20% of crashes are caused by someone not listed on the policy.

10-year scan period
Under the proposed changes, ICBC will consider at-fault crashes that occurred over the past 10 years to help determine a customer’s premium. In the current model, at-fault crashes affect a customer’s premiums for three years.  

To ease the impacts to drivers, ICBC is proposing to start with a shorter scan period. Upon implementation in September 2019, ICBC would only look back at 2.5 years of at-fault claims history. Claims older than 2.5 years would not be used in the new premium calculation. Each year thereafter, ICBC would extend the scan period by one year, until 2027, when the full 10-year scan period would be in place.

One-crash forgiveness
Under the proposed changes, ICBC will forgive one claim for customers with 20 years of driving experience and no at-fault crashes in the last 10 years. Once a claim has been forgiven, customers will need to earn this credit back with 10 years of crash-free driving. Currently, drivers can earn back their discount within three years.

Under the current system, a customer receiving the top discount can have up to three crashes in the same year, and still pay the same basic premium as a driver who is crash-free.

Claim repayment
Under the proposed changes, claim repayment will only apply to crashes where there was less than $2,000 in material damage. Currently, there are no limits on the ability to repay a claim, meaning that people who can afford to repay a claim do not see any impact on their insurance premiums due to the crash.

2. Experience

Under the proposed model, customers with more years of driving experience and no at-fault crashes would see greater discounts than they do today.

Up to 40 years
The proposed model recognizes up to 40 years of driving experience. Today, customers stop receiving additional basic insurance discounts after nine years of crash-free driving.

New B.C. residents
Under the proposed changes, ICBC will increase the maximum credit available to new residents to 15 years, up from the current eight. To acknowledge the challenges of obtaining previous insurance documentation, which is currently a requirement, new residents will no longer be required to provide this. They will only need to provide proof of how long they have had a driver’s licence.

New residents represent a higher risk for the first few years of driving in a new jurisdiction due to changes in landscape and environmental factors. The proposed changes will reflect this heightened risk in new resident insurance premiums during their first three years of driving in B.C.

Inexperienced drivers
Under the proposed changes, ICBC will continue to offer inexperienced drivers discounted premiums. However, these discounts would be reduced to better reflect the actual risk inexperienced drivers represent.

Under the current model, inexperienced drivers pay less than the risk they represent. Their basic insurance premiums are significantly discounted.

3. Vehicle

Under the proposed changes, ICBC would make adjustments to recognize the changes in communities and vehicle use throughout British Columbia. Going forward, this information would be updated regularly to increase fairness.

The current model uses data about where a vehicle is driven (territory) and what it is driven for (class) when determining a premium. However, this data has not been updated in more than 10 years, despite rising crash rates that can be due to a number of factors, such as traffic density, population growth and changes in the urban infrastructure.

4. Discounts

Under the proposed changes, ICBC intends to keep the existing 25% discount for qualifying persons with disabilities to help support these customers and maintain affordability. ICBC is also proposing to continue to offer a discount for eligible seniors.

Under the proposed changes, ICBC plans to introduce two new discounts — a 10% discount for vehicles that have original manufacturer-installed automatic emergency braking technology and a 10% discount for vehicles that are driven less than 5,000 kilometres in a year. As customers renew their insurance, their Autoplan broker will ask for their current odometer reading in order to potentially receive the discount upon implementation next year.

5. Add-ons

Under the proposed changes, ICBC would offer unlisted driver protection for an additional premium. This is intended to recognize that situations might arise where a driver needs to lend their vehicle to someone who is not listed, e.g., lending a truck to a friend to help them move. The unlisted driver protection would be available starting at $50. 

If a customer’s vehicle is involved in an at-fault crash caused by an unlisted driver and they did not purchase the unlisted driver protection, there could be a financial consequence of 15 times the premium differential had that driver been listed on the policy to a maximum of $5,000.

Under the proposed changes, if a learner will be using the vehicle, ICBC will apply a premium to recognize the risk that a learner driver represents. The premium will range between $130 and $230 depending on where the driver lives.

The learner add-on is intended to help cover the costs of learners’ at-fault crashes since ICBC will not be counting crashes caused by a learner against them. The learner stage will also not count toward driver experience.

Under the current model, a learner’s at-fault crashes are reflected in the premiums of the owner of the vehicle and some learner experience is counted when certain requirements are met (such as completing approved driver training courses).

6. Penalty points and risk premiums

As previously announced, increases will be made to the Driver Penalty Point (DPP) and Driver Risk Premium (DRP) programs to ensure high-risk drivers pay more. Upon approval, the DPP and DRP amounts will increase by 20% in fall 2018, and 20% in fall 2019.

Customers impacted

All of the proposed changes will apply to policies that are not part of a fleet, including vehicles used for personal, business and artisan use.

Fleet customers (five or more vehicles) will only be impacted by the proposed changes to territory and rate class, and they will also be eligible for the two new discounts (vehicle technology and low kilometres).

Taxi fleets will be eligible for the new technology discount. Taxi non-fleets will be impacted by all of the changes, except the proposed changes to territory and rate class. Taxis are largely being looked at separately as government undertakes a broader review of modernizing passenger transportation.