Stephen Rees's blog

Thoughts about the relationships between transport and the urban area it serves

Posts Tagged ‘ICBC

Reform of ICBC needed

with 2 comments

Screen Shot 2017-07-23 at 5.44.26 PMThe front page of Saturday’s Vancouver Sun was the need to raise insurance rates identified by a leaked report that the BC Liberals asked for, and then kept quiet about. Over the next 24 hours the tone of the Sun story has changed on line since, of course, the corporation (Postmedia) that publishes the Sun supports the BC Liberals. So the banner headline on line now reads “NDP must come clean about plans for ICBC, Liberal Opposition demands” rather than “Huge ICBC rate hikes loom without reform:report”. The report comes from Ernst & Young and is critical of the policies of the BC Liberal government which cross subsidized mandatory basic rates from the profitable optional side.

The report was commissioned by ICBC’s board earlier this year, but was not made public. A copy was leaked to Postmedia News.

While ICBC premiums are among the highest in Canada, the report said, “they are not high enough to cover the true cost of paying claims.”

“More accidents are occurring on B.C.’s roads, and the number and average settlement of claims are increasing. Only recent government intervention has protected B.C. drivers from the currently required 15 per cent to 20 per cent price increases. This rate protection has eroded ICBC’s financial situation to a point where it is not sustainable.

“The average driver in B.C. may need to pay almost $2,000 in annual total premiums for auto insurance by 2019, an increase of 30 per cent over today’s rates,” the report said, adding that assumes that current trends persist, that ICBC is expected to cover its costs from its premiums and that significant reforms are not made.

There are a number of recommendations

The review suggested B.C. could follow the models of New Brunswick, Alberta and parts of Australia by capping payouts for pain and suffering on minor injuries from $4,000 to $9,000, while at the same time increasing accident wage and medical benefits.

It’s also possible to let drivers buy an optional “top-up” coverage that would, in effect, give the drivers back the right to sue to replace any reduced claim money they could have got through the courts.

Minor claims have soared in cost by 365 per cent since 2000 and are eating up 60 per cent of all total injury payouts, says the report. The size of cash settlements for minor injuries is also rising, as is the number of accidents on the road and the cost to fix technology inside modern vehicles.

Of course the Liberals are already accusing the NDP of wanting a “no fault” system – even before the new government has had time to get their feet under the table. The Liberals are also in full damage control mode since it was their decision to cancel photo radar that started the problem. Changing red light cameras to catch speeders would be a relatively easy thing to do, but the real speed problems are out on the open road. The intersection issues arise from contempt for other basic rules of the road, lack of common courtesy and patience, and an almost total absence of common sense.

Unfortunately there is no mention of the interval camera system. This uses existing technology widely used in traffic surveys to match number plates over a fixed distance. The owner of the vehicle gets a ticket when the car has covered the distance between two cameras in much less time than the posted speed limit allows. This system is more effective that the just at this point of the old photo radar – which was housed in a fairly distinctive vehicle, and thus fairly easy to avoid.

I think another reform is not just capping the amount allowed for minor claims, but also banning the present practice of lawyers advertising for claimants and being paid on a share of the payout. The incessant repetition of these ads during the CBC 6pm tv news means I now know them off by heart. And the message is that you can make ICBC increase the payments they offer if you sign on with a the named lawyer. Of course, what it does not say is the increase in the settlement goes to the lawyer and not the plaintiff. I find these practices offensive and they have only been permitted in recent years and should be reversed. It simply wrong to expect to make a profit from the suffering of others – and I think these adverts get very close to encouraging people to exaggerate their claims.

The mismanagement of crown corporations under the previous government is going to take some time to correct. If I were advising the BC Liberals, I would tell them to tone down the attacks, when clearly the current government has to do what it can to sort out the mess the Liberals left behind. The current tone taken by my local MLA Andrew Wilkinson, Liberal MLA for Vancouver-Quilchena is not one that is going to win him much support. Except from Mr Toad who enjoys speeding and relishes crashes as exciting intervals in an otherwise dull existence.

Written by Stephen Rees

July 23, 2017 at 5:48 pm

ICBC Consultation: Calculating premiums

with 5 comments

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

_________________________________________

From Tannis Braithwaite

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:

_________________________________________

ICBC is proposing to change the way it calculates insurance premiums.  Anyone can make a submission on-line at: http://www.publicengagement.icbc.com/index.html  The deadline is June 22, 2012.
The proposed change is intended to be revenue neutral, and to better align premium with risk in individual cases.  Structurally, it’s a switch from “vehicle-based” insurance to “driver-based” insurance.  Under the current “vehicle-based” system crash history follows the insured vehicle.  So, for example, if “A” crashes “B’s” car, the crash is recorded against “B’s” insurance.  If “A” has had a bunch of crashes in one vehicle and then insures a second vehicle, the second vehicle is insured at a rate reflecting zero crashes.  Under a driver-based system, “A’s” crash history would follow “A”.  In either system, vehicles/drivers are only penalized for “at fault” crashes, which ICBC defines as having been at least 25% at fault in a collision.
Statistically, if you crash your car, you are much more likely to have a second crash within the next year than is someone who didn’t have the first crash.  Insurance premiums go up after a crash, not because the insurance company is trying to recover past losses, but because you are more likely to cost them again in the subsequent policy year.
Factors that predict your crash risk
ICBC is prohibited from considering age, sex, race or any other prohibited ground of discrimination in determining crash risk.  The factors they do/propose to use for determining premiums in the new system are:
Driving experience – the likelihood of having a crash decreases dramatically with each year of driving experience for the first 5 years, continues to decrease a fair bit over each of the next five years, and continues to decreases a little bit for each additional year of experience….forever.  The current system recognizes the number of years of crash-free driving, but doesn’t recognize that a person with more years of driving experience is less likely to crash than a person with an equivalent crash history but fewer years of driving experience.  According to ICBC, experience isn’t just a stand-in for age.  Even if you don’t start driving until you are older, you are more likely to have a crash in the first several years of driving than you are with more years of experience.  ICBC proposes to recognize years of driving experience, not just years of crash-free driving experience.  ICBC wants feedback on how often premiums should be adjusted to reflect driving experience.
Number of past crashes – The more crashes you have had in the past and the more recently you’ve had them, the more crashes you are likely to have in the future.  It takes 15 years for the statistical effect of a single crash to wear off completely.  So, for example, someone who had a single crash 9 years ago is still 15% more likely to have a second crash in the current policy year than is someone who has never had a crash.  The current system recognizes the effect of a previous crash for only 3 years.  ICBC proposes to extend the number of years that a crash will continue to count in calculating your insurance premium to up to 15 years.  They want feedback on how long you think crash history should count for.  ICBC is also considering a system that also weights more recent crashes more heavily than crashes that occurred longer ago, which is in keeping with statistical risk.  But, ICBC thinks this might be too hard for people to understand(!??)  Surely it’s not.
No more free crashes: ICBC currently has a policy of giving drivers one “free” crash after 12 years of crash-free driving.  A person with a very long term crash-free record can have up to 3 crashes in quick succession with no impact on premium.  There is no good rationale underlying this policy.  Statistically, if you have a single crash, you are 40% more likely to have a second crash in the policy year than someone who didn’t have the first crash, and this is true even if you’ve previously had a long period of crash-free driving.  ICBC proposes either getting rid of the free-crash policy or offering an opt-out option in exchange for a premium reduction.  And, of course, there’s really no such thing as a “free” crash, since the $$ have to come from somewhere.  Failing to penalize a driver for having a crash means penalizing drivers that don’t have crashes.
Other Driver crashes: About 20% of crashes are by drivers other than the registered owner/principal driver of the at-fault vehicle.  Under the current system, the vehicle owner pays the increased premiums regardless of whether they were driving at the time of the crash.  Under a driver-based system, the crash would follow the driver rather than the vehicle.  The problem for ICBC is that not all crash-causing drivers have an insured vehicle, so they need to work out how to collect from uninsured drivers who crash.  Three options that have been proposed to deal with this problem are: spread the cost of the uninsured driver across all insured drivers, continue charging the cost against the vehicle owner, or send a bill for $500 to the crash causer and then try to collect.  Personally, I think ICBC can come up with something better, like maybe true driver based insurance where you have to be insured to drive.  Just not sure how this would be enforced.  Also, most “other driver” crashes are by members of the same household, e.g., child driving parent’s car, so this may affect the best options for enforcement.
Driving Violations: Driving violations are a strong statistical indicator of crash risk.  ICBC tried to introduce driving violations into its assessment of crash risk a couple of years ago, but was prohibited from doing so by the Provincial government (call it, the leading edge of the tsunami of political interference in regulated utilities that we’ve seen lately).  Now, they are trying again, but this time proposing to limit consideration of driving violations to the most serious ones, such as, impaired driving and street racing.  Again, there is no reason for basing crash risk on only the most serious driving violations.  Statistically, every driving violation correlates with higher crash risk, and there is no reason why lower risk drivers should be subsidizing higher risk drivers.    This is especially true when you consider how many un-ticketed driving violations occur and the police focus on the most egregious ones.  Also, it seems to me that including all driving violations in the assessment of crash risk is a good way to provide drivers with an incentive to follow the rules of the road.  ICBC just needs to spin this issue better next time, and they really need to hear that the public supports the use of driving violations in calculating insurance premiums.
Some things that came up in discussion
  • 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.

 

Written by Stephen Rees

June 21, 2012 at 10:45 am

ICBC paying severance to staff fired in chop-shop scandal

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CBC

This is bizarre. What was happening: ” formerly written-off cars were being resold after their repair histories were altered.” So eight staff members were – let me use the euphemism to cover a variety of issues – ‘let go’.

What happened was clearly wrong, certainly a tort for the people who got cars with fraudulent records, probably criminal. Certainly due cause for dismissal. But it now appears that the action was more about PR than good sense. The whole thing was quickly hushed up – so the scandal would “go away”, preferably quickly.

If people are dismissed – or allowed to resign – to avoid other penalties they deserve no severance at all. Indeed those who profitted from this scheme should make restitution. But that would require an investigation, which might well turn up other related issues – who knows? – and all that it seems was to be avoided at all costs. Which is something you might be able to do with a closely held private company. But not with a crown coporation.

The more one knows about ICBC, the less one feels comfortable about it. I have been sitting on some material for some time now on distance based inssurance. This is an idea that Tod Littmann has been promoting for some time – and I did not really want to move onto his turf. But the main  concern I have is that ICBC has not – so far as I can determine – ever even considered the  idea. It certianly has given no credible reason why it should not be tried.  And my question is why should this be? Why is ICBC so reluctant to being open and letting its owners – us – know what it is doing and why.

It is something of  a cultural issue in crown corporations – and it is noticeable that the present government is getting increasingly ham fisted at dealing with these government owned and directed operations. BC Ferries and BC Transit are the two I am most familiar with – and neither are any longer examples to be proud of. The way BC Hydro is being chopped up and forced into a corner is even worse.  And at least part of the problem is that the right wing does not think public enterprises should be successful. They must be made to fail in order to promote the ideology (there’s a word I havebeen reaching for a lot lately) that private is good public is bad.

Written by Stephen Rees

December 5, 2008 at 10:10 am

Posted in politics, privatisation

Tagged with

ICBC selling insurance to unlicensed drivers

with one comment

CBC

There is a great deal of buck passing in this story – mainly between ICBC and its broker.  When BC decided to go for public auto insurance, it made a clever decision to enlist the brokerages, which quite literally bought off the biggest potential source of opposition. It actually only makes political sense. Because the major function of a broker is to find the customer the best policy for his or her needs, and since ICBC is the only place you can buy the legally required insurance there is not a lot for the broker to do. And the fact that a lot of lawyers in BC now specialize in fighting ICBC,  shows where the brokers feel their loyalty lies. It was probably fairly sensible to use existing outlets, but then there are also other places you have to go – like the ICBC  claims centres and the province’s driver services offices.

Selling insurance to people who are not legally allowed to drive is, quite simply, wrong. Placing the onus on the customer may sound like a good practice from a business perspective

“Anybody who wants to buy insurance can buy insurance from us,” McLelland [the ICBC spokesperson] said. “The principle is we want people to have insurance.”

McLelland said the corporation does not track how many insurance policies are issued to drivers who don’t have B.C. licences. He said it also doesn’t count how may claims are denied for breach of policy because the licence isn’t valid.

BUT they did not have insurance. Money was taken from them for a policy that was worthless. If you are in a business that collects tax for the government (the ICBC brokers dish out license plates and stickers) and administers government activities such as motor vehicle registration and compliance with BC legislation (you cannot license your vehicle if it fails the AirCare test for instance) then you do not get the privilege of picking and chosing which bits of the law on drivers and vehicles you are supposed to know about.

And ICBC having taking the premiums has a moral if not a legal duty to acknowledge that its systems failed, the policy should not have been sold but in this case, the innocent victim who was badly advised by an officially appointed agent he should have been able to rely upon and he should be recompensed.

Written by Stephen Rees

May 28, 2008 at 10:53 am

Posted in Road safety

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