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

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.

BC legislatureICBC

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

The winners of the boys virtual moguls competition with the Freestyle club. (Contributed by Troy Nixon)
Fernie Freestyle Club carves up FAR

The club has been undeterred by the challenges of the season

A rainbow shining on Kelowna General Hospital on May 12, 2020 International Nurses Day. (Steve Wensley - Prime Light Media)
New COVID cases trending down in Interior Health

24 new cases reported Thursday, Feb. 25, death at Kelowna General Hospital

Fernie man dies in avalanche

The 35-year-old man was caught in an avalanche near Valemount

Sylvain Fabi, Canada’s chief negotiator for the Columbia River Treaty, joined a number of government and Indigenous government stakeholders for a virtual town hall on Feb. 24, 2021, to update the state of the Columbia River Treaty negotiations. Trevor Crawley photo/Zoom screenshot
Indigenous input key to Columbia River Treaty negotiations

Ecosystem function included in negotiations along with flood management and power generation priorities

The area of the East Kootenay under a special avalanche warning. Submitted
Avalanche Canada issues special warning for southern Rockies

Northern Rockies also under special avalanche warning

Provincial health officer Dr. Bonnie Henry updates B.C.’s COVID-19 situation at the B.C. legislature. (B.C. government)
B.C. reports 10 additional deaths, 395 new COVID-19 cases

The majority of new coronavirus infections were in the Fraser Health region

The BC Prosecution Service announced last year that it was appointing lawyer Marilyn Sandford as a special prosecutor to review the case, following media inquiries about disclosure issues linked to a pathologist involved in the matter. (Black Press Media files)
Possible miscarriage of justice in B.C. woman’s conviction in toddler drowning: prosecutor

Tammy Bouvette was originally charged with second-degree murder but pleaded guilty in 2013 to the lesser charge

A kid in elementary school wearing a face mask amid the COVID-19 pandemic. (Metro Creative)
Union asks why an elementary school mask rule wouldn’t work in B.C. if it does elsewhere

B.C. education minister announced expansion of mask-wearing rules in middle, high school but not elementary students

A pharmacist prepares a COVID-19 vaccine at Village Green Retirement Campus in Federal Way on Jan. 26. (Olivia Sullivan/Sound Publishing)
Canada approves use of AstraZeneca’s COVID-19 vaccine

The country joins more than a dozen others in giving the shot the green light

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

A new survey has found that virtual visits are British Columbian’s preferred way to see the doctor amid the COVID-19 pandemic. (Unsplash)
Majority of British Columbians now prefer routine virtual doctor’s visits: study

More than 82% feel virtual health options reduce wait times, 64% think they lead to better health

Carolyn Howe, a kindergarten teacher and vice president of the Greater Victoria Teachers’ Association, says educators are feeling the strain of the COVID-19 pandemic and the influx of pressure that comes with it. (Nina Grossman/News Staff)
Stress leave, tears and insomnia: B.C. teachers feel the strain of COVID-19

Teachers still adjusting to mask and cleaning rules, pressures from outside and within

Captain and Maria, a pair of big and affectionate akbash dogs, must be adopted together because they are so closely bonded. (SPCA image)
Shuswap SPCA seeks forever home for inseparable Akbash dogs

A fundraiser to help medical expenses for Captain and Maria earned over 10 times its goal

The missing camper heard a GSAR helicopter, and ran from his tree well waving his arms. File photo
Man trapped on Manning mountain did nearly everything right to survive: SAR

The winter experienced camper was overwhelmed by snow conditions

Most Read