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

Volunteer Robbie McKnight works the screening table at the Coast Mountain College COVID-19 vaccination clinic in Smithers. (Deb Meissner photo)
Smithers clinic expands vaccine eligibility to ages 60+

Community members born in 1961 or earlier can now call for an appointment at 1-844-255-7555

Styrofoam burning at the Woodmere Tree Nursery in Telka created billowing black smoke over Tyhee Lake and resulted in air quality advisory for Bulkley Valley. (Contributed photo)
VIDEO: Telkwa styrofoam fire air quality advisory lifted

A woodpile fire at Woodmere Tree Nursery spread to styrofoam blocks causing air quality concerns

Restaurant patrons enjoy the weather on a patio in Vancouver, B.C., Monday, April 5, 2021. The province has suspended indoor dining at restaurants and pubs until at least April 19 in B.C. due to a spike in COVID-19 numbers. THE CANADIAN PRESS/Jonathan Hayward
B.C. sets new COVID-19 daily record with 1,293 cases Thursday

New order allows workplace closures when infections found

The new 3,500 hectare conservancy in Tahltan territory is located next to Mount Edziza Provincial Park. (BC Parks Photo)
New conservancy protects sacred Tahltan land near Mount Edziza Provincial Park

Project is a collaboration between Skeena Resources, conservation groups and the TCG

The Smithers Local Health Area reported just six new cases of COVID-19 for the week of March 21 - 27. (BC CDC graphic)
Weekly COVID cases decline in Smithers and Northwest

Smithers community members born in 1951 or before (70 years old) now eligible for vaccination

B.C. Health Minister Adrian Dix and Premier John Horgan describe vaccine rollout at the legislature, March 29, 2021. (B.C. government)
1,262 more COVID-19 infections in B.C. Friday, 9,574 active cases

Province’s mass vaccination reaches one million people

People walk past the Olympic rings in Whistler, B.C., Friday, May 15, 2020. Whistler which is a travel destination for tourists around the world is seeing the effects of travel bans due to COVID-19. THE CANADIAN PRESS/Jonathan Hayward
Adults living, working in Whistler, B.C., eligible for COVID-19 vaccine on Monday

The move comes as the province deals with a rush of COVID-19 and variant cases in the community

RCMP crest. (Black Press Media files)
UPDATE: RCMP investigating after child, 6, dies at motel in Duncan, B.C.

The BC Coroners Service is conducting its own investigation into the circumstances around the child’s death

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

RCMP display some of the fish seized from three suspects who pleaded guilty to violating the Fisheries Act in 2019, in this undated handout photo. THE CANADIAN PRESS/HO - RCMP
3 banned from fishing, holding licences after overfishing violations near Vancouver Island

Mounties seized the group’s 30-foot fishing vessel and all equipment on board at the time

B.C. Premier John Horgan responds to questions during a postelection news conference in Vancouver, on Sunday, October 25, 2020. British Columbia’s opposition Liberals and Greens acknowledge the COVID-19 pandemic has presented huge challenges for Horgan’s government, but they say Monday’s throne speech must outline a coherent plan for the province’s economic, health, social and environmental future. THE CANADIAN PRESS/Darryl Dyck
Horgan’s NDP to bring in throne speech in B.C., Opposition wants coherent plan

Farnworth said the budget will include details of government investment in communities and infrastructure

FILE - An arena worker removes the net from the ice after the Vancouver Canucks and Calgary Flames NHL hockey game was postponed due to a positive COVID-19 test result, in Vancouver, British Columbia, in this Wednesday, March 31, 2021, file photo. As vaccinations ramp up past a pace of 3 million a day in the U.S, the NHL is in a tougher spot than the other three major North American professional sports leagues because seven of 31 teams are based on Canada. (Darryl Dyck/The Canadian Press via AP, File)
Vancouver Canucks scheduled to practice Sunday, resume games April 16 after COVID outbreak

Canucks outbreak delayed the team’s season by eight games

Most Read