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VICTORIA – The Insurance Corp. of B.C. is considering a dramatic retooling of how it assesses drivers’ insurance rates and may also scrap its policy of giving good drivers a “free” crash before charging them higher premiums.
The new insurance method, if approved by the B.C. Utilities Commission next year, would shift from a vehicle-based claims-rated scale to one that focuses on drivers and their records.
That means the claims history would follow the driver, instead of the vehicle. The new system could result in basic premiums dropping for two-thirds of insured motorists, and significant increases for the rest, who represent a higher-risk profile.
But before it seeks those changes, ICBC says it plans to conduct widespread public consultation to help vet its newest set of ideas.
As part of that consultation, it wants the public to consider three options: doing away with the policy of allowing one “free” crash, keeping the policy, or some hybrid of the two that would allow good drivers to opt out in exchange for the lowest rates possible.
ICBC says the changes to its insurance system are needed because the current method allows drivers who have enough accident-free driving experience to still qualify for the maximum discount after as many as three at-fault accidents.
“What we’ve found is customers have said that is unfair and we agree with them,” said Mark Blucher, senior vice-president of insurance.
“We don’t think it differentiates risk and that’s why were now putting forward a proposal to look at a different way of assessing risk.”
Blucher said under the current system, accident-free drivers enjoying the lowest rate don’t face an insurance hike on the first, second or even third accident. That’s because the maximum discount is offered to drivers on the bottom 12 steps of ICBC’s 30-level system, and at-fault crashes move drivers up the scale between three and six steps at a time depending on how many accidents they’ve had.
Under the system the highest-risk drivers — those who have had seven or more crashes in a short period — pay 205 per cent of the basic premium.
The changes will also mean that a vehicle owner will not pay more if someone else has a crash while using their vehicle, Blucher said.
“If somebody else has a crash in your car, you [now] end up paying the increased premium,” he said. “Certainly we’ve heard people don’t think that’s fair at all.“
ICBC has put together a series of options it wants the public to consider that could address how to penalize bad drivers and reward good drivers in various scenarios.
For example, it suggests that higher-risk drivers who don’t own a car or buy insurance could face a much higher premium when they eventually go to insure a vehicle. An alternative suggestion could see ICBC increase rates by $5 for all drivers to cover those who don’t own vehicles but with a higher-risk profile.
ICBC will spend the next five weeks holding town hall meetings in a dozen communities to discuss the potential changes and to collect feedback. It promised the public consultation process isn’t just window dressing; it will be used to shape new policy.
“The feedback is going to have a strong influence on where we take this,” Blucher said. “We haven’t determined the solution here.”
“We’re going to customers and asking them to give us their feedback around potential solutions, all of which we’re comfortable with ultimately being considered to be implemented.”
People will also be able to provide commentary at www.publicengagement.icbc.com.
Blucher said most Canadian jurisdictions have moved away from a vehicle claims-rated system and now assess risk based on driver profile.
The new plan doesn’t include a review of the driver penalty points system or the driver-risk penalty program, Blucher said. Those additional programs penalize drivers who receive tickets for motor vehicle act violations such as speeding or street-racing.
The proposed changes come almost exactly one year after ICBC killed an unpopular idea where drivers who received just one speeding ticket could expect to pay higher rates for three years.
“That is completely off the table. It is not part of this consultation and we’re not changing the current way we deal with penalty points and driver-risk premiums,” Steve Crombie, ICBC’s vice-president of corporate communications, said Monday.
Crombie said the company will provide a summary of the consultation to the public by early August and will then develop a proposal it will bring to the public and to government.
He said ICBC hopes to make a submission to the B.C. Utilities Commission between mid- and late 2013.
The new system should be in place by about 2014 or early 2015 pending approvals, he said.
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