Re: Insurance Corporation of British Columbia 2007 Rate Design Application Intervener Evidence

Transcription

1 C8-3 Via July 13, 2007 British Columbia Utilities Commission 6th Floor 900 Howe Street Vancouver, BC V6Z 2N Dear Mr. Pellatt: Re: Insurance Corporation of British Columbia 2007 Rate Design Application Intervener Evidence Please find attached our evidence. Regards, Nancy Wells NW Insurance Brokers Ltd W Hastings Street Vancouver, BC V6C 1A5 (604) (604) nwells@nwinsurance.ca Copy: Registered Interveners Insurance Corporation of British Columbia

2 NW Insurance Brokers Ltd. Re: Insurance Corporation of British Columbia 2007 Rate Design Application Evidence ICBC differentiates rate classes according to vehicle use and in the case of rate classes 021, 022, 023, 024, and 027, vehicle use and users of the vehicle (i.e. owners, principal operators and members of the household.) to accurately assess risk. However, aggregating rate classes as follows: 001/021, 002/022, 003/023, 004/024, and 007/027, distorts actual risk. Presently, ICBC reports statistics, data and basic premium tariffs for these rate classes in this manner. The 2007 rate design proposal says ICBC s overall goal with respect to Basic insurance rate design is to have Basic insurance premiums reflect the risk of causing crashes and the associated financial implications. 1 We contend that separating the rate classes, i.e. 001, 021, 002, 022, 003, 023, 004, 024, 007, and 027, would accurately and fairly reflect risk of car crashes and associated financial implications. Presenting differentiated rate classes to brokers and customers clarifies the declaration process; moreover, decrease claim litigation costs from inaccurate information. The following rate classes are discussed: 001, 021, 002, 022, 003, 0023, 004, 024, 007, and 027. For simplicity, the rate classes will be separated into two groups: Strict Vehicle Use group (001, 002, 003, 004, and 007) and Vehicle Use and 10 years holding a valid licence group (021, 022, 023, 024, and 027). Exhibit 1 states the vehicle use description for 007 and represents the Strict Vehicle Use Group. Exhibit 2 states the vehicle use description for 027 and represents Vehicle Use and 10 years holding a valid licence group. 1 March 29, 2007 filing Insurance Corporation of British Columbia Rate Design Application respecting universal compulsory automobile insurance (Basic insurance) Volume 1 p. ii Page 1 of 5

3 Differentiating the rate classes for data collection, statistical analysis, risk assessment and basic premium tariff will reflect the enhanced vehicle description of Vehicle Use and 10 years holding a valid licence group. The basic premium, under the current rate design, does not reward the better driver and inaccurately rates the risk profile of these policyholders. This new rate structure will not disrupt ICBC s current rate structure, but make if more efficient and effective for the brokers and motoring public. Separating the rate classes provides ICBC with a new level of detail for their quantitative analysis and helps them achieve the overall goal to have Basic insurance premium reflect risk of causing crashes and associated financial impacts 2. NW Insurance asked ICBC Does the Autoplan Data Capture System default to the 007 rate class should the vehicle owner remove all optional coverage?. ICBC answered: No. There is no difference in Basic premium between rate classes 007 and 027, so there is no reason to force customers who do not buy Optional insurance from ICBC to change their rate class. When customers buy only Basic insurance, ICBC neither requires them to make a distinction between rate classes 027 and 007, nor bars them from doing so. Keeping the declarations accurate allows customers to add Optional coverages later without risking the possibility that they might forget to correct the rate class at that time. When customers buy only Basic insurance, ICBC neither requires them to make a distinction between rate classes 027 and 007, nor bars them from doing so. 3 It is correct that the basic premium tariffs are the same for 027 and 007. However, according to the ICBC Autoplan guide book, provided to the consumer, states [under Rate Class], If the rate class is wrong and you make a claim, the claim could be denied or you may have to pay a penalty. It is misleading for ICBC to say they treat 027 and 007 rate classes the same because Rate Design RD NWI.6.1 p. l Page 2 of 5

4 the basic premium tariffs are the same. This creates confusion to the motoring public, having the aforementioned rate classes combined. Differentiating the rate classes will provide clarity to the consumer and when claims are filed, will save ICBC time and money spent. ICBC fails to differentiate between these rate classes, so there is no quantitative data available as to the number of claims denied based on 001, 021, 002, 022, 003, 0023, 004, 024, 007, and 027 rates classes. ICBC states: Collectively drivers other than, new drivers, seniors and those with a disability discount, are paying more than the actuarially determined rates would indicate 4 If ICBC is capable of charging an additional premium of $25 for other drivers, surely ICBC can discount accordingly. For NWI to accurately provide evidence, ICBC must answer our Information Request dated May 17, RD IBC 9.5 Page 3 of 5

5 Exhibit 1 Rate Class 007 Vehicle Use: Business use Courtesy car Driving school vehicle (5000kg GVW or less) Pilot car Funeral home limousine Vehicle may be used on not more than six (6) days in a calendar month for use under rate class 013. Page 4 of 5

6 Exhibit 2 Rate Class: 027 Vehicle Use: Business use, pilot car, or funeral home limousine: Owner, principal operator, and members of their households using the vehicle must have held a valid driver s licence for 10 years or longer (see note below), and Applicable only to a policy eligible for a Claim-Rated Scale discount of 0% (base rate) or better (level 0 or lower on Table 1 of Schedule D of this basic insurance tariff.) 1. Vehicle may be used on not more than six (6) days in a calendar month for use under rate class 013, provided that when the vehicle is so used by the owner, principal operator, or a member of the household of either, that person must have held a valid driver s licence for 10 years or longer (see note below). 2. Members of the house holds of the owner or principal operator who have not held a valid driver s licence for 10 years or longer may use the vehicle for a medical emergency. 3. In cases of joint ownership or lease, both of the owners, the principal operator and members of their households using the vehicle must have held a valid driver s licence for 10 years or longer. Note: The 10-yea period for which a valid driver s licence must be held includes all period during which: A valid driver s licence or valid learner driver s licence was held in another jurisdiction A valid British Columbia learner s licence was held. This includes learner s licences issued prior to the implementation of the BC Graduated Licensing Program, as well as time earned under any valid learner s licence (either Learner or Novice stage ) issued under the BC Graduated Licensing Program. The 10-year period excludes all periods during which the driver s licence or any of the learner s licences listed above was cancelled, suspended, lapsed or voluntarily surrendered. Note: Rate class 027 does not include use of the vehicle as a: Courtesy car Driving school vehicle Page 5 of 5