Vehicle insurance rates that don’t adjust for younger drivers’ higher risk create an effective subsidy from older drivers to younger ones. (Fraser Institute)

Older B.C. drivers subsidizing younger ones, study finds

ICBC protects higher-risk drivers, pays for testing costs

The Insurance Corp. of B.C. is moving to make bad drivers pay more for rising accident and injury costs, but a new study says it is still giving higher-risk drivers a break in rates.

“The government’s recent changes are welcome, but they don’t go far enough to fix our fundamentally flawed system that punishes safer drivers with higher rates to subsidize riskier drivers,” said John Chant, professor emeritus of economics at Simon Fraser University and author of a new study, Understanding Why Basic Auto Insurance Rates in B.C. Are So High.

The B.C. government has implemented changes for next year that tighten the safe driver discount rules, so drivers need to go 10 years without an at-fault crash before they can make a claim without their insurance rate rising.

Rates have already gone up 20 per cent for accumulating too many penalty points or serious offence convictions, with another 20 per cent coming in September 2019. Owners who have a learner using their vehicles will pay for the additional risk, ranging from from $130 to $230 per year on basic insurance.

RELATED: Pay, bonuses being reduced for ICBC executives

RELATED: ICBC moves to tighten safe driver discount rules

But Chant says ICBC should do what private insurance companies do: charge higher rates for younger drivers who are consistently more likely to have accidents than other drivers. He calculates that drivers aged 16-20 get an effective discount of $833 per year, while drivers 55-64 pay $228 more and those aged 65-74 pay $234 more than what their insurance risk would indicate.

Another feature of B.C.’s public monopoly on basic vehicle insurance is the extras that have been added to ICBC over the years. Paying for traffic safety programs and operating driver testing, licensing and fine collection add another $50 to each driver’s basic insurance bill for the year that they likely don’t know about, Chant estimates.

“The costs of coverage beyond the minimum are buried in a 1,000-page document,” Chant wrote. “Those of non-insurance activities can be found in an obscure note to ICBC’s financial statements, and the loss experience of drivers of different ages does not appear to be public.”

Effective April 1, 2019, a limit of $5,500 takes effect for “pain and suffering” claims on vehicle insurance. A claim resolution tribunal is also being put in place to settle disputed claims out of court, after legal and expert fees were identified as major factors in an 80 per cent increase in injury claim costs in recent years.

With increasing accidents and claims in recent years, ICBC ended 2016-17 with a loss of $889 million, and projected a deficit of more than $1 billion for 2017-18.


@tomfletcherbc
tfletcher@blackpress.ca

Like us on Facebook and follow us on Twitter.

Just Posted

City budget 2019: More firefighters approved by Kelowna city council

Council has approved a request to add eight more firefighters over the next two years

Holiday recycling rules in Kelowna

Do you know how to responsibly recycle this holiday season?

Rockets lose in Lethbridge

In the second game of the road trip the Rockets lost 5-1 to the Hurricanes

Your guide to winter light ups around the Okanagan

From Vernon to Summerland, with a stop in Kelowna, we’ve found some activities for you to enjoy

Your morning news in 90: Dec. 13, 2018

Tune in for 90 seconds to get the top headlines for the Okanagan, Shuswap and Similkameen.

RCMP responding to bomb threats at South Okanagan car dealerships

First responders at the scene of after bomb threats issued

Supreme Court upholds Canada’s right to reargue facts in assisted-dying case

Julia Lamb and the B.C. Civil Liberties Association are spearheading a challenge of the law

B.C. company facing several charges in 2017 chicken abuse case

CFIA investigation leads to 38 charges against Elite Farm Services and Ontario-based Sofina Foods

Okanagan Symphony presents Yuletide Tales

Christmas concert features three classic Christmas stories

Woman forcibly confined, sexually assaulted between Creston and Cranbrook

The suspect forced the woman into her vehicle before driving along Highway 3

Activists protest at Shuswap pig abattoir

Incident at meat processing plant under investigation by Salmon Arm RCMP

Giving the gift of nature

Please don’t be mad, but I bought you a moose

‘I thought I was dead as soon as I saw the gun’

Keremeos gas station attendant tells story about man with gun coming to store

Most Read