Starting in September, Auto Insurance is All About the Driver
Last month, we talked about the first set of changes coming to ICBC Auto Insurance (Autoplan) policies as sweeping changes come into effect as of September 1, 2018.
Other changes are afoot, including the ways ICBC will use individual driving and claims histories to rate auto insurance policies, impacting many (if not most) drivers in British Columbia.
It’s time to say goodbye to the “same old, same old” — meaning your rates could go up in the fall.
This is the first in a series of articles that will dig a bit deeper to give you a heads-up about what’s changing, and what you can do to prepare.
Please note that ICBC has not finalized all the details of the changes, and so at this point this is our best interpretation of what will occur — as always, our blog posts are not ‘the official word’ (read how to use our website), and if you have any questions or concerns, talk to an AllWest Insurance broker, or an ICBC representative.
WHAT’S GOING AWAY
The first thing to know, is that some of the policies ICBC uses to rate your Autoplan coverage will be disappearing, including:
- Blanket Rate Classes & Default Discounts: With a new rating system based on individual driver history, where you live, and how you use your vehicle, some rate classes may change, as well as how discounts are applied. ICBC is focusing specifically on using individual driver history and 10 years of recent, provincial driving and crash data, to assess the different risks associated with all types of drivers.
- Unlimited Claim Repayment: As of September 1, 2019, claims related to vehicle damage in excess of $2,000 cannot be paid down, and will appear on driving histories, which in turn will affect future insurance premiums and insurability.
- Infraction ‘Forgiveness’: Currently, speeding tickets and a variety of other driving infractions don’t impact your insurance rating unless penalty points were involved. That changes in the fall with a new approach to assessing Driver Risk Premium.
WHY THE CHANGES
You’ve probably heard that a lot about ICBC in recent years, specifically about how the cost of claims has been greater than expected, and rate changes have not kept up.
At the same time, using years of claims data, ICBC has determined that the small number of drivers accounting for a relatively high proportion of total claim expenses are not being rated on the risk factors they truly represent.
Specifically, individual driving history and prior claims have not necessarily been considered on an individual basis by ICBC; for example, speeding tickets are not considered today as part of insurance premium rating (unless point penalties are involved).
This has also been problematic with secondary or occasional drivers, who could represent higher risk categories due to prior infractions or minor crashes, or lack of experience, and yet have not been considered as part of the current rating system.
These higher risks in the insurance ‘pool’ — the sum total of people insured under a type of insurance — are ultimately part of the reason why ICBC claims costs can go up without ever being off-set by appropriate insurance premiums; in some cases, people who shouldn’t be insured, or should be paying penalties or higher rates, simply aren’t visible to ICBC.
With a focus on the driver, instead of the vehicle — and stricter disclosure requirements about who’s driving every vehicle — all this will change.
THE IMPACT ON ALL DRIVERS
Let’s look at the worst case scenario of not getting the right insurance – if you’re the primary driver of a vehicle, and a secondary (or occasional) driver not listed on your policy has a crash or an infraction, you could be penalized, in addition to being responsible for damages and paying a higher premium next year.
Whether a friend or family member, ICBC wants to ensure that person’s driving or claims history is always what determines risk, and thus your insurance premium.
Bear in mind that, because rates will now be calculated based on driver merit, in some cases they may also go down. Only claims-free or experienced drivers using your vehicle? You may save, not pay extra.
Either way, in the new year, every British Columbian will have to rethink how they insure themselves, as opposed to how they insure their vehicles.
Bottom line — it’s no longer a simple transaction. Talk to an insurance broker about how the changes will impact you as far ahead in advance of September 1, 2019 as you can so you know what to expect.
Look for more posts about the ICBC changes coming soon.
We’re All About You.®