The Heratd, Wednesday, November 28, 1979 Page § WHAT’S FAIR? EALR stands for Fundamental Auto Insurance Rating. It’s a totally new ICBC program developed in response to Bill 33, the Automobile Insurance Non-Discrimination Act . . introduced hy the Government of the Province of British Columbia. The aim of the FA.LR. program is to eliminate discrimination from auto insurance rates ~discrimination by reason of age, eX, marital status and geographic location. The FA.LR. program will be phased in over a five year period starting in 1980. WHY FAIR? For the past 50 years, the auto insurance industry has tended to categarize drivers in groups based on the probability of their being involved in an accident. But drivers in the same group don’t necessarily have the same driving habits and attitudes; so cach group included people who have actually had an accident as well as : eee A. REMOVAL a A. REMOVAL OF OF SEX AGEASA | AND MARITAL RATING FACTOR STATUS. This will mean This will mean lower premiums lower premiums for an additional for an estimated 55,000 male 215,000 male vehicle owners vehicle owners ar principal operators under 30 years of age. Their average premium will drop by about 30?i. Ce er ae . aoe Paap yer we des . under 25 and will bring to a total of 270,000 the number of oe + about 25". plow tt B. REMOVAL OF SAFE DRIVING INCENTIVE GRANT. This drop in premiums will provide greater benefits for single male vehicle owners or principal operators under 25 than the Safe _ Driving Incentive Grant; so the Grant will he discontinued. for reasons of age, sex and marital status. Atthis point, the only factor in determining premiums for Third Party Liability cover- age will be the use of the vehicle-for pleasure, for business, or drive-to-wark. For deter- mining the premium for Collision coverage, the only factors will be the use of the vehicle C_ADJUSTMENTOFTERRITORIALRATES. its value. The eliniination of rate differences between B, NEW ACCIDENT PREMIUM territorics will take five years. The biggest FOR DRIVERS initial impact will be in Victoria where the aver- age premium will increase by $19-less in subsequent years. Changes in other territorics - up or down -will be only a few dollars a year- between $2 and $10. This accident premium will be inwoduced in 1981. It recognizes that the person behind the wheel is responsible for the safe operation of a vehicle, whether or not he or she is the owner. The amount of this premium will be $100 ayear for three years forcach accident in whichthe driver isat fault in causing property damage or hadily injury toanother person. The premium will be payable at the time the fault is determined, and on the next two anniversary dates of the accident, This premium will notbe charged forany claim of $100 or less. C. ADJUSTMENT OF TERRITORIAL RATES. In 1981 the differences between territorial rates will be adjusted toa maximum spread of 20". Note that the Safe Driving Vehicle Discount will still be in effect in 1980. Note that the safe Driving Vehicle Dixcotiat will still bein effeet in SE. _those who haven’. One glaring inequity of this system is that a young . people whose average premium will dropby This step marks an end to discrimination ~ man who is accident-free pays up to 34 times more for his insurance than an older driver who has caused an accident. It simply isn’t fair, 7 7 We could have eliminated discrimination by reducing rates for young drivers and adding the amount tothe premiums of all other drivers. But that wouldn’t have been fair either. WHAT'S DIFFERENT ABOUT FAIR? The basic difference in the EA.LR, program is that itis concerned with individ ual performance -with abilitics, not probabilities. This new program is based on the concept that all vehicle owners - young and ald, male and female, married and single-should pay a base premium that is the lowest possible premium forthcir coverage: And thisshould apply whether they live in Prince George, Victoria ar Osoyuos. eo This will he achieved by placing everyone’s premium at the approximate level of the present three-year accident-free rate, regard- less of claims record. Then-and here's the big difference - premiums will be based on real losses rather than probable losses. Accident premiums will be introduced and charged only to t pase whe are responsible for accidents which result in claims, And that’s tair. 18 & ADJUSTMENT OF TERRITORIAL RATES Differences between territorial rates will now be adjusted toa maximum spread of 10%. OR A, NEW BASE RATE INTRODUCED Commencing in 1982, the base rate for all vehicle owners will be reduced to roughly the same level as the present three-year accident-free premium. The anioune wittbe about the same as the pot sg My ag er ip aS foe the present 32°29" Sate Driving Vehicle Discount. ADSUSTMENT™ °°!" OF TERRITORIAL ; RATES. Territorial rates will be further adjusted toa maximum difference of 5%, B. SAFE DRIVING VEHICLE DISCOUNT DISCONTINUED With everyone enjoying the same base rate, this discount system is no longer necessary. Instead of charging higher premiums for every- one and then giving a discouu for those whoare accident-tree, ICBC is now applying the knver base rate for everyone but charging an additional premium for those who are responsible for an accident. In effect, everyone is considered innocent until proven guilty, everyone is rated as accident-free until they are responsible for an accident. nating factor in determining rates. The EA.LR. program will now be tully in place. In B.C. the use of a velricie will be the only factor in detennining pre- amiums for Third Party Liab- ility coverage. The use and value of a vehicle will he the only factors in determining rates tor Collision coverage. C. NEW ACCIDENT PREMIUM FOR VEHICLE OWNERS 1982 will also see the introduction of an aecident premium charged to vehicle awners who make claims on their Collision coverage. This is in addition ta the accident premium for drivers, who may or may not be the vehicle owner. The amount will he §20.a year torthree years and will be payable for each claim, This amount will be pay- able at insurance renewal time; in 1982 it will be charged for any claim made in the pre- ecding three years. D. ADJUSTMENT OF TERRITORIALRATES Territorial rate differences will be adjusted to amaximum spread ot 15". Su)