Public insurer proposes major shake-up to auto insurance rating model

The Insurance Corporation of B.C. is proposing a significant shake-up of its auto insurance rating system, introducing a “fair rate” system that would have higher-risk drivers paying higher premiums than lower-risk drivers.

“We want to make Basic insurance premiums more fair by holding all drivers more accountable for their driving decisions and behaviour,” the province’s public insurer said in a statement. “That means drivers should pay the right premium for the risk they represent on our roads.”

If approved by the regulator, the B.C. Utilities Commission, starting September 2019, Basic insurance premiums will be determined by several factors that fall under these categories: the driver, the vehicle, and discounts and add-ons.

Under the driver category, significant changes are being proposed to increase driver accountability. The driver category is broken down into two factors: how long the insured has been driving (experience) and how many crashes they have caused (crash history).

“Right now, these factors affect your premiums, but only in a limited way,” ICBC says. “In the future, these two factors would have a greater impact on your premiums than they do today.”

At-fault crashes would follow the driver, not the vehicle. For example, if a neighbour borrows the insured’s vehicle and causes a crash, the claim would be attached to the neighbour’s driving record, not the insured’s. The driver would be accountable, not the owner.

All drivers of the vehicle would be listed on the policy. The majority (75%) of the insured’s premium would be based on the principal driver, with the remaining 25% reflecting the other driver with the highest risk.

In addition, the insurer will be moving to a 10-year “scan period” for crashes.

“We would look at a customer’s at-fault crashes over the past 10 years,” ICBC says. “To minimize impacts upon implementation, we would only look back to Mar. 1, 2017 of at-fault claims history. Claims older than Mar. 1, 2017 would not be used in the new premium calculation. Each year thereafter, we would extend the scan period by one year, until 2027 when the full 10-year scan period would be in place.”

Claim repayment would only apply to crashes where the total cost of the claim is less than $2,000. Currently, there are no limits on the ability to repay a claim and that allows some drivers to mask the true risk they represent, the public insurer says.

One-crash forgiveness would be offered. The premiums of a driver with one at-fault claim after 20 years of driving experience would not be affected, providing they haven’t caused any other crashes in the last 10 years.

Rating for experience would change as well. “Driving experience [will be] recognized for longer,” ICBC says. “The proposed model recognizes up to 40 years of driving experience whereas today, customers stop receiving additional driving experience discounts after just nine years.”

Territory and crash rate factors would be updated to reflect more current data available.

More information about the changes are available at the public insurer’s website.