Les Leyne: Fine-tuning the ICBC fiddle

Les Leyne mugshot genericOnce you get past the sneaky projection of the impact, the new ICBC premium system coming next year looks OK.

If you’re old, hardly ever go anywhere and never let anyone else drive your car. If you drive so safely you can’t even remember your last accident. If you’ve got the latest automatic-braking technology. And if you live far away from distracted lunatics piling up their cars on clogged city streets.

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They won’t look so OK if you’re young, have a learner’s licence and live in a city.

If you’ve got a bad driving record, here’s a tip — buy a bus pass or a bike. Because you’re going to get whacked.

Attorney General David Eby tried to be reassuring about the many changes coming.

That’s a change, because he has been as alarmist as possible about the shape ICBC is in since he took over responsibility last year.

His briefing tried to leave the impression that two-thirds of drivers would be better off.

“To be clear, if there is a rate increase as a result of the rate hearing in December, two-thirds of drivers will be better off under the proposed system we have announced today.”

But the briefing notes make it clear that’s only projected for the first year of the transition. The changes are being phased in over three years. Some are so big they’ve capped the year-by-year increase over that transition period. That mostly affects the losers in the new approach.

But if the majority would benefit once the full impact takes hold over time, not just the first year, they would have said so. They didn’t.

They couldn’t, partly because in the first year, the time span for claims that jack up premiums only goes back 2.5 years. It gets longer every year, bringing more claims into play and raising rates.

And the reassuring statement minimizes even what it acknowledges. There most assuredly will be a rate increase approved by the B.C. Utilities Commission. ICBC is a billion dollars in the hole and needs every nickel it can find. The corporation has to file its request with the BCUC by the end of the year. It’s not going to be peanuts.

So right away, nobody is better off. Rates are going up, period. Eby is trying to argue that rates won’t go up as high for most people as they might have. It’s more likely the majority could be potentially less worse off, not better off.

And all the changes unveiled this week are about basic coverage. The optional extended coverage many people buy from ICBC jumped by almost 10 per cent last year, far higher than the basic premium. It could be expected to rise again. The government ordered a half-billion dollars scooped from that side of the business last year to prop up the basic side.

Drivers got an average $130 hike all told last year.

Another category of premiums is going even higher. Driver penalty-point premiums and driver risk premiums will jump 20 per cent this fall and another 20 per cent next year.

ICBC collects about $26 million a year from those additional levies, a fraction of what the main premiums bring in, but that revenue stream will increase substantially.

There will be minimal sympathy for those drivers paying the penalties. But spare a place in your heart for young and inexperienced drivers, because they’re going to come out losers, just based on the actuarial tables.

Inexperienced drivers will continue to get a discount, but it will be reduced, because they pay far less than the risk they represent.

Learner-licence holders will pay up to $230 more. The only break for them is that crashes during that phase won’t count against their record.

Eby said: “If we had the actual cost of new drivers paid for by them, it would be many, many thousands of dollars more than these drivers are paying right now.

“They are heavily subsidized by other drivers. We are making a very small shift here to reflect some of the increased risk.”

Last year, ICBC said it needed a 20 per cent increase on basic premiums, but asked for 6.4 per cent to smooth it out.

Whatever it asks for, it still needs a lot more. It’s unlikely the majority of drivers will be better off.

lleyne@timescolonist.com

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