Brokers seek clarification before spreading information on ICBC auto insurance changes

Published: August 13, 2018

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Last week, the Insurance Corporation of British Columbia (ICBC) announced new reforms to auto insurance in British Columbia. With much changing in the province, brokers have offered their opinions and will be tasked with ensuring customers understand what is in store. However, brokerages in B.C. say they need more information before passing on details to clients.

ICBC says it wants to implement a “fair rate” system for auto insurance, which would put more emphasis on high-risk drivers covering costs through higher premiums.

“We want to make Basic insurance premiums more fair by holding all drivers more accountable for their driving decisions and behaviour,” ICBC says. “That means drivers should pay the right premium for the risk they represent on our roads.”

High-risk drivers are those who are (as the name suggests) considered to be a higher risk for an insurance company. These drivers can be deemed high risk for several reasons:

  • Convicted of a driving infraction (distracted driving, speeding, impaired driving, dangerous driving, etc.)
  • Been involved in collisions
  • Has not paid insurance premiums on time in the past

Brokers believe they need to know more about how driver accountability will be handled under the new laws. Under the proposed changes, the insurer will categorize premiums under three defining factors: the vehicle, discounts and add-ons, and the driver. How the company assesses the driver is arguably the biggest change proposed, aiming to put more accountability on the individual.

ICBC will look into how much experience a driver has and how many crashes they have caused. The company says under the current model, motorists are only affected by these factors “in a limited way”. The new rules would mean drivers with less experience and/or a poor history will pay more.

One grey area for brokers is the fact all drivers will be placed on a policy, with the majority of the premium (75%) going to the principal driver. The rest of the 25% will be for the driver with the highest risk.

“Certainly, the identification and explanation of the additional drivers is going to be a conversation that the brokers are going to have to take lead on, on behalf of ICBC,” said Mike Dakin, compliance manager for InsureBC Group. “My understanding is that as part of the transaction, the customer is going to have to think about who else is going to drive that vehicle. That will all have to be collected in some sort of manner.”