New To No One's Surprise, Auto Insurance In Addition To The Canadian Govt Bring A Huge Problem. It's Clearly A Losing Tendency That's Getting To A Greater Extent Than Expensive
a 203-page study past times accounting theater Ernst together with Young that says Canadian car insurance is doomed if trends expire along together with zero is done to reform the system.
The study flora that despite collecting higher premiums than other provinces, the insurance together with banking compendium inwards Canada nevertheless doesn’t receive got plenty to embrace the toll of claims. If non addressed, the gap betwixt the premiums collected together with the claim costs is projected to increase to $1.1 billion annually past times 2019.
Why? Millionaires together with billionaires drive Ferraris, Lamborghinis, Bentleys, together with Rolls Royces.
They are charged roughly the same every bit a Honda. They toll a fortune to repair. That isn't coming out of their premium. It's coming out of everyone's premium... simply a Honda possessor is truly roofing the toll of their repairs inwards the long term, plus adding to the compendiums assets, together with roofing other expensive repairs.
Plus, accidents are upwardly close 25% inwards the past times iv years, together with the govt took coin out of the insurance funds, every bit govts do, of course, because they are run past times irresponsible millionaires playing alongside other peoples coin inwards lodge to larn wealthier, together with reimburse their crusade contributors at the same time.
Think I'm wrong? See whatever any province broad programs beingness started to supersede the 50 or 100 twelvemonth quondam failing infrastructure similar rusting bridges? Nope.
Reading this study is fascinating, together with though I've never read 1 before, I abide by this 1 illuminating on how complex it is for a car insurance companionship of whatever size to innovation ahead to hold profit, without pricing themselves out of customers.
But inwards Canada's example, they've made some disastrous mistakes. They didn't accuse high run a jeopardy drivers more, together with they didn't accuse depression run a jeopardy skilful driving history customers less.
High-Value vehicle Surcharge
Recognizing the chop-chop increasing costs to repair high-value vehicles, authorities latterly approved a high-value vehicle Basic surcharge of 100% on vehicles over $150,000.
We recommend going farther to arrive at greater fairness inwards rates recognizing the extra costs beingness borne on the insurance arrangement together with all policy holders past times expensive luxury vehicles.
A sliding scale pricing model would apply to the same grouping of vehicles based on the vehicles value over the threshold. For example, applying a $1,000 surcharge to vehicles inwards a higher house the $150,000 threshold plus an additional $7 premium for every $1000 betwixt the threshhold sum together with the MSRP
Example:
For a $180,000 vehicle the HVV premium is $1000 + $210 = $1210
For a $575,000 vehicle the HVV premium is $1000 + $2975 = $3975
This presents a fairer distribution of premium costs amid high-value vehicle owners together with would increase annual revenue from this initiative.
Not plenty to alter the problem, non fifty-fifty 1%, simply it's a start
Regardless of the electrical current or futurity choice of production structure, ICBC needs to alter its pricing together with run a jeopardy model to endure able to clearly position together with penalize higher-risk drivers, together with conversely meliorate the vantage arrangement for those who drive safely.
It is estimated that a modernized pricing together with run a jeopardy model could generate upwardly to $80m inwards claim savings per year.
They ought to learn this materials inwards high school.
http://www.icbc.com/about-icbc/company-info/Documents/Affordable-and-Effective-AutoInsurance-Report.pdf
http://www.timescolonist.com/ndp-reject-30-icbc-rate-hike-photo-radar-and-no-fault-insurance-1.21338492