Topic 3 – Drivers with Minor and Serious Convictions
How it currently works
Not all driving convictions represent the same level of risk.
For the purposes of this engagement, minor driving convictions should be viewed as most Motor Vehicle Act driving-related violations that have a fine attached to them, such as speeding, unsafe lane changes or seatbelt violations. These minor convictions may also include points under the Driver Penalty Point (DPP) premium program.
Serious driving convictions should be viewed as convictions that, in addition to the fines and points under the DPP, are assigned a Driver Risk Premium (DRP), such as excessive speeding, impaired driving and distracted driving.
- The DPP and DRP programs are managed and administered as stand-alone programs and the amounts collected are used to offset the overall Basic insurance rates. The amounts currently collected under these programs have not been updated in over 10 years, however, as a result of the increasing costs and number of crashes, Basic insurance premiums has increased by more than 40% since 2007.
- Neither minor nor serious driving convictions are reflected in ICBC’s Optional insurance rates.
- Approximately 5% of ICBC customers have two or more serious convictions over three years, yet pay the same premium as a customer with no convictions.
- Most insurance companies use driving convictions to help determine how much each customer should pay, or even to deny coverage, which results in many of these high-risk customers choosing ICBC instead. ICBC provides high-risk customers with insurance, and those drivers’ insurance rates would be more fair if they better reflected the risks they represent.
Proposals to make rates more fair:
- Basic Insurance: Increase current penalty premiums for certain high-risk drivers
Better align Driver Penalty Points (DPP) and the Driver Risk Premiums (DRP) with Basic insurance premium increases (more than 40% over the past 10 years) to more accurately reflect the risks associated with those who have multiple minor driving convictions or one or more serious driving convictions.
Making this change would mean:
- Increasing the DPP and DRP by 20% in year one and another 20% in year two; and,
- Going forward, aligning penalty program increases with any future Basic insurance rate change.
For instance, a 20% increase in year one means a minor driving conviction that currently results in a $175 fine would increase to $210. Under the DRP program, the premium for the first occurrence of excessive speeding currently costs $320 per year, and this would increase to $384 per year.
- Optional Insurance: Introduce driving convictions into Optional insurance pricing
Consider minor and serious driving convictions in setting rates for ICBC’s Optional insurance to better differentiate risks between customers with frequent or serious convictions and those without. Specifically:
- Minor driving convictions: A single minor conviction, such as speeding, unsafe lane changes or seatbelt violations, over a three-year period would not impact Optional insurance rates. However, a second (and any subsequent) conviction in a three-year period could increase a driver’s Optional insurance premium under this proposal.
- Serious driving convictions: One serious conviction, such as impaired driving, excessive speeding or distracted driving, within a three-year period would result in an increase to Optional insurance premium under this proposal.