Posts Tagged ‘car insurance’
ICBC Consultation: Calculating premiums
The following is a message that was posted this morning to the trans-action and HUB mailing lists. I am copying it to this blog in case there are readers in BC who are not members of those lists, and who have yet to comment to ICBC.
I did not complete the on line form, I sent them an email
There ought to be a way to link the number of kilometres driven to the amount of the basic insurance premium.
ICBC commissioned research from Todd Littman several years ago which showed that distance based insurance is practical, possible and would be much fairer than the current system.It could be introduced on a voluntary basis initially. Actuarially, there is a strong correlation between distance driven and the risk of a crash.ICBC has been unresponsive to this proposal for too long.There is a comprehensive technical report available at http://www.vtpi.org/dbvi_com.pdf
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Tomorrow is the deadline to give input on ICBC’s proposal to restructure how it calculates insurance premiums. Please go to http://www.publicengagement.icbc.com/index.html and tell them that you think driving violations should be considered in the calculation of insurance premiums.
More explanation of the ICBC proposal is below:
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- Giving credit for higher levels of driver training, similar to discounts that can be obtained on fleet insurance for organizations implementing safe driver programs
- Relationship between distance driven and crash-risk. Proposal for distance-based insurance and better availability of alternative types of insurance such as temporary or occasional coverage.
- The system doesn’t include any impact to premiums based on the severity of the crash. There must be correlations or indicators of severe crash risk, such as high risk driving violations, or past crash history that help to predict the risk of a severe crash.
- Insurance brokers don’t want the system to be too complicated to explain to people, or to take too much risk in people not understanding or not being told the right thing.
- BC has a very low % of uninsured drivers compared to other jurisdictions. We need to consider whether there is a tipping point where high risk drivers just stop insuring their vehicles in large numbers.
- It’s good to have incentives that prevent owners from loaning their vehicles to high risk drivers (re other driver crashes).
- Driving records are at the heart of driver-based insurance and all violations should be considered, though not weighted equally.
Petition Pushes ‘Fairer Form of Auto Insurance’
The Tyee continues the campaign for Pay As You Drive car insurance, which this blog also has done for some years (as you can see from those links). As has the Tyee: in fact that was where Cliff Cipriani read about it. And he has now launched an online petition and this video
There is some choice in car insurance in BC. ICBC however is compulsory for “third party risk” – in other words the costs that might be incurred by someone else – also known as “legal minimum”. To cover your own risk – “optional insurance” – can be taken out with ICBC or private insurers. When ICBC was set up, as a way of keeping local insurance brokers on side, the new corporation was required to only sell through a brokerage. It is not allowed to sell insurance directly. Of course, as with many other things, you can do lots of things for yourself on line these days. that’s the way a lot of people buy air tickets now – so much so that travel agents now cannot get commission from the airlines but have to charge a feee to their customers. You can buy optional car insurance on line – and over the phone – too, and I would recommend that if you live in BC, you check out the costs compared to ICBC. I know I save money and get better coverage by buying mine on line. YMMV.
What is mistaken is the assumption that ICBC is “supposed to pursue the public interest”. If that were the case, there would have been PAYD years ago. After all, ICBC commissioned the report from Todd Littman – and then sat on it. And their spokesperson is willfully misleading when he talks about Norwich Union. They wound up their PAYD pilot due to other market pressures – nothing to do with “lack of interest” – and actually some longer time ago than “last year”.
The risk of collision is directly proportional to distance driven. So in terms of the risk assessment, charging people who drive much further than average is very bad insurance practice. In general, I support the idea of public insurance. The evidence is quite clear that we get a better deal from ICBC overall than similar places that rely solely on the private sector – even if it is regulated. I also think that ICBC does a very good job at promoting safer roads – for example by their encouragement of the use of roundabouts. Private sector insurers don’t do that. But the mulish resistance to PAYD from North Vancouver has to stop. Please sign the petition.
Stephen Rees's blog 