The Insurance Corporation of British Columbia (ICBC) has introduced a new formula for calculating auto insurance premiums, and more than half the drivers who switched to the new system early have already seen their annual premiums drop by an average of $329. One driver saw their premium drop by $2,000 a year.
ICBC, a crown corporation that has a monopoly on the auto insurance market in B.C., will be giving more weight to individual driver histories when calculating basic insurance premiums. Starting Sept. 1, premiums will be based 75% on the main driver of a vehicle, and 25% on the secondary driver with the highest level of risk.
Previously, crash claims followed a vehicle, not a driver. Drivers are now required to list anyone who drives their vehicle on their policy.
About 1,200 British Columbians have already secured insurance using the new algorithm by renewing their policies in advance, and the difference is substantial. Fifty six percent of drivers saw their annual premiums drop by an average of $329, while 43% said their premiums went up by about $212.
Others saw even more drastic changes. One driver is now paying $2,000 less in annual premiums because the new algorithm removed crashes caused by other drivers from his record, the CBC reported.
Meanwhile, another driver saw their premium go up by $2,000 because of collisions they were involved in.
“Higher-risk drivers, people who are inexperienced and people who cause multiple crashes should be paying more for their insurance than everybody else,” said Joanna Linsangan, a media spokesperson at ICBC.
“That's what this new algorithm is focused on and that's what people are going to start seeing this September.”
B.C. drivers currently pay some of the highest auto insurance premiums in Canada. In April, ICBC introduced a series of reforms to try to offset its high operating costs, but many were not happy with its implications for drivers. A new $5,500 cap on pain and suffering payouts was especially contentious.
Other factors that impact premium costs are the insured vehicle, how it’s used and where the vehicle is registered.
ICBC will give drivers a 10% discount if their vehicle has safety features like autonomous emergency braking, or if the car is driven less than 5,000 in a year.