Following feedback from nearly 35,000 British Columbians, the Government of British Columbia is taking action toward making insurance rates more fair for B.C. drivers.
“Changes to our auto insurance rating system are long overdue,” said Attorney General David Eby. “The responses from the ICBC rate fairness engagement indicate the majority of British Columbians favour changes that will make insurance more affordable for low-risk drivers and see high-risk drivers pay increased insurance premiums to better reflect the risks they represent.”
Based on public feedback, the vast majority of British Columbians (82.3%) believe risky drivers should pay more. Feedback also shows a majority of those who responded agree that:
- The option to pay back claims should be changed (currently, customers can repay vehicle damage claims and not have their premiums affected).
- A driver-based system would be more fair, as insurance rates would be tied to drivers, rather than vehicle owners.
- Driving convictions should play a greater role on premiums.
Feedback was mixed regarding the penalty amount owners should pay if a crash is caused by an unlisted driver, as well as whether distance driven should play a greater role in determining insurance rates.
As a first step to improve rate fairness, government has asked ICBC to bring forward increases to the Driver Risk Premium (DRP) program (which includes excessive speeding, impaired driving and distracted driving), and the Driver Penalty Point (DPP) program for minor driving violations, to the B.C. Utilities Commission to be ready for implementation as early as fall 2018.
Once approved by the BCUC, these increases will result in penalty amounts increasing by 20% in the first year, and an additional 20% hike in the next year, to help make sure drivers are paying an appropriate amount that reflects their driving behaviours. Once these changes have been implemented, future penalty program premium increases are anticipated to be aligned with any future basic insurance rate changes.
“While moving quickly to implement changes for dangerous driving, we are also using this feedback to inform additional changes in the coming months to help make rates more fair for drivers,” said Eby. “This feedback will help ensure our improved auto insurance rating system is consistent with the values of British Columbians.”
ICBC rate fairness engagement report: http://engage.gov.bc.ca/ratefairness/
Information about ICBC’s current rate system and the propsals considered in the engagement: https://engage.gov.bc.ca/ratefairness/rate-fairness-101/
Launch of ICBC rate fairness engagement: https://news.gov.bc.ca/16522
A backgrounder follows.
Ministry of Attorney General778 678-1572
The ICBC rate fairness engagement survey ran between March 5 and April 5, 2018. The survey was competed by 34,277 individuals. There were 494 individual emails submissions from the general public, as well as seven stakeholder submissions from organizations and experts.
- 82.3% said that drivers who are found to be at-fault in crashes should pay more.
- Written comments indicated they believe that the current system does not penalize high-risk drivers appropriately.
- 63.5% said that the option to pay back at-fault claims should be modified or eliminated entirely, while 30.7% believed it should be kept the same.
- The most popular response (41.4%) was that the option should be kept only for vehicle damage claims totalling $2,000 or less.
- 92.1% indicated that the driver — not the registered owner — should be held responsible and see their premiums increase if they cause a crash.
- 74.3% agreed that drivers with one serious conviction within a three-year period should pay higher insurance premiums.
- 58.7% agreed that drivers with two or more minor convictions in a three-year period should pay higher premiums.
- When asked about an appropriate scan period to consider convictions, responses were mixed, with 39.3% at five years, while 50.6% preferred a scan period of two (21.2%) or three (29.4%) years. Age and driving experience had a strong influence on the responses.
- 50.6% supported transition caps of 20% or more annually, to phase in rate increases for high-risk drivers, and decreases for low-risk drivers.
- Written feedback from those who chose the 20% or greater than 20% transition options suggested that higher rates for higher-risk drivers are appropriate, and lower-risk drivers deserve to receive the benefits as soon as possible.
- Regarding the amount of a one-time penalty for a registered owner who did not list a driver who was found at-fault in a crash, 70.9% of people chose a fee option ($250, $500 or $1,000), while a 29.1% chose don’t know/no opinion.
- 38.5% selected $250 (54.3% of those who chose one of the three fee amounts).
- 46.5% of respondents disagreed or strongly disagreed that distance driven should have a greater impact on insurance rates, while 38.8% agreed or strongly agreed.
- Written comments indicated that respondents believed distance driven was a poor estimator of risk, and cited the typically longer driving distances of those who live in rural and remote areas as a reason why considering distance may be unfair.