Safe driver discounts, lending vehicles to young drivers under scrutiny for ICBC

By on March 7, 2018
B.C. Attorney General David Eby. (Black Press files).

At-fault accident could cost you for 10 years, instead of three.

With the Insurance Corporation of B.C. struggling with rising accident rates and injury claim costs, the B.C. government is considering tightening the rules for safe driver discounts.

The province is seeking public input on proposals to make rules stricter for safe driver discounts, suggesting that an at-fault accident should produce higher insurance rates for up to 10 years instead of being forgiven after three years.

“The consistent feedback I’ve received from British Columbians is they think that bad drivers should be paying more, and good drivers should be paying less,” said Attorney General David Eby. “The question is, who is a bad driver and how much more should they pay.”

About 40 per cent of at-fault claims are forgiven each year, because the crashes are caused by drivers who have the maximum safe driver discount. Currently drivers can cause one accident without any impact on their ICBC rate if they have been claim-free for 13 years. The new proposal is to extend that to 20 years.

The province is also proposing to penalize people who lend their vehicle to a higher-risk driver. One out of five B.C. drivers who caused a crash were driving someone else’s vehicle, government statistics show.

The “driver-based model” means registered owners of vehicles crashed by other drivers would not see rate increases, and crashes would follow the at-fault driver on all the vehicles they drive.

Vehicle owners would have to list the drivers allowed to use their vehicle, and pay a fee if an unlisted driver causes a crash. That fee would be higher if the unlisted driver is related to the vehicle owner.

“Currently, insurance follows the vehicle instead of following the driver,” Eby said. “A good example of groups who should be thinking about the impact of drivers using your car … is someone who may have a young, inexperienced driver in their household that they’re lending the family car to.”

Another proposal in the government’s public engagement website is restricting peoples’ ability to pay out of pocket for vehicle damage they caused, to keep an at-fault accident from being on their ICBC record and affecting their insurance rates.

The public engagement and survey on the new ICBC rate structure is open until April 5.

ICBC cash reserves fall below B.C. government requirements

Accident rates and ICBC injury payouts have risen sharply in B.C. in recent years. (Black Press files).

Rising crash claims and injury payouts have depleted the Insurance Corporation of B.C.’s cash reserves below the province’s standard, forcing the province to exempt the Crown corporation from the rules to allow reforms.

Attorney General David Eby said he eased the cash reserve regulations to allow ICBC to apply to the B.C. Utilities Commission for a rate increase it is already collecting, and possibly additional increases.

“The rule in B.C. is that ICBC has to have 100 per cent match between the amount of money they have in the bank and the claims they are aware of,” Eby told reporters at the B.C. legislature Wednesday. “ICBC doesn’t have that. They have about 54 cents in the bank for every dollar of claim that they’re aware of. So we had to change the rule in order to appear in front of the utilities commission to lay out the changes that we’re doing with ICBC to get it back on track financially.”

The province announced earlier this month cost-cutting changes that include a $5,500 limit on payouts for pain and suffering claims, to take effect in April 2019.

In 2013, ICBC had $1.45 in the bank for every dollar of claims, but the situation has eroded due to an 80 per cent increase in injury claim costs in the past seven years.

Eby intends to present legislation this spring to limit minor injury payouts, and also double the maximum benefit for serious injury claims from $150,000 to $300,000. With cost-containing measures a year away, it is not yet clear how much insurance rates will have to rise as ICBC estimates a $1.3 billion shortfall for the current year.

A 6.4 per cent increase in basic insurance took effect on an interim basis in November, with an additional increase to optional insurance resulting in an eight per cent jump in cost for vehicle owners who get both types of coverage from ICBC.

A consultant’s report released last summer suggested that ICBC rates could go up 30 per cent by 2019 if changes are not made.

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