Public Auto Insurance Rules!

[BubberMiley]

Manitoba Public Insurance just announced a rebate of 10% to all their customers. Presently I pay about $1000 a year for my Toyota SUV, and I can expect to get a cheque for $100 back. Rates will go down by 2.5% next year. It's great that equity from the corporation goes directly back into the hands of ratepayers, and not into CEO salaries and shareholder dividends. Now if NAFTA would allow homeowners insurance to be publicly owned, we wouldn't be gouged as we are in that department.

[Charles Anthony]

It sounds like they have been charging you guys too much at the start.

What is "allow homeowners insurance to be publicly owned" supposed to mean? Do you want the taxpayer to subsidize your insurance AND you want to pay more for it?? Sounds like a double bonus!

[Michael Hardner]

?!?

I need more information. Do you live in an urban or rural area ? How old are you, and what year/make is the vehicle ?

[BubberMiley]

?!?

I need more information. Do you live in an urban or rural area ? How old are you, and what year/make is the vehicle ?

Taxpayers don't subsidize public insurance. Ratepayers pay for it and they pay less, on average, than private.

I'm a middle-age white guy with a good driving record. I drive a 1999 4Runner. Urban/rural doesn't make a difference in Manitoba.

[Mimas]

It sounds like they have been charging you guys too much at the start.

What is "allow homeowners insurance to be publicly owned" supposed to mean? Do you want the taxpayer to subsidize your insurance AND you want to pay more for it?? Sounds like a double bonus!

In Ontario, accident payouts amount to only 1/5 of premiums. That's overcharging! The remaining 80% go cover the investment losses of the industry and to the shareholders. In Ontario, you'd be paying $2,000 not $1,000 for your Toyota SUV.

[Charles Anthony]

That's overcharging! The remaining 80% go cover the investment losses of the industry and to the shareholders.

If that is the case, there is a barrier to competition.

Whatever that barrier happens to be, you need to find it and get rid of it.

Using government ownership as a solution to divide profits is the height of absurdity and irresponsibility. It would be cheaper just to raise all of our taxes and make the government payout all accidents.

[Riverwind]

If that is the case, there is a barrier to competition. Whatever that barrier happens to be, you need to find it and get rid of it.

The private auto insurance industry wastes a lot of money arguing with other insurance companies about who is at fault for any given accident. Publicly run insurance companies don't have this expense and can offer lower premiums as a result.

Insurance companies are also notorious for collusion where they will use the fact that someone has been turned down by another insurance company as an excuse to deny insurance. This means that many people will find themselves denied access to an essential service even if competition theoretically exists

Public auto insurance is more efficient than private auto insurance because it spreads risk across a larger number of people and is not allowed to arbitrarily deny insurance to any but the most extreme cases. This might lead to higher premiums for a minority of lucky drivers but does provide a system where all drivers benefit from a predictable rate structure.

In BC, this predictable rate structure is a huge benefit because anyone who has an accident can quickly calculate whether they would be better off settling without making a claim. In provinces with private insurance having even a minor accident that you don't even claim can lead to huge and unpredictable premium increases. This unpredictability is a huge cost that most people don't take into account until after they have been burned.

[Michael Hardner]

Using government ownership as a solution to divide profits is the height of absurdity and irresponsibility. It would be cheaper just to raise all of our taxes and make the government payout all accidents.

Sorry, when the profits are unfairly high, it sounds more like a tax to me.

I'm sure one of the barriers to entry is high start up costs, and risks with regards to changing legislation. One such risk might be that people become so sick of the gouging that the government takes it over.

[Charles Anthony]

The private auto insurance industry wastes a lot of money arguing with other insurance companies about who is at fault for any given accident. Publicly run insurance companies don't have this expense and can offer lower premiums as a result.

I have only anecdotal experience. I can not generalize.

I have been in a few multi-vehicle accidents in my life. In each case, who was at fault was obvious. The brokers read the police reports and called the other driver's broker. Brokers called back within minutes. There was never a delay because the police reports were black and white with respect to who was at fault.

How do you expect the "governement insurance" to handle a police report that was NOT black and white?

Sorry, when the profits are unfairly high, it sounds more like a tax to me.

You are right. It is a tax if you are forced to have insurance.

[Riverwind]

How do you expect the "governement insurance" to handle a police report that was NOT black and white?

A single insurer does not really care who is at fault since they have to pay the claim regardless. Private insurance companies would benefit if the blame/cost can be foisted on the other company. This fighting over who has to pay increases the overall cost of a private system.

[Charles Anthony]

A single insurer does not really care who is at fault since they have to pay the claim regardless.

If that is the case, my proposal:

It would be cheaper just to raise all of our taxes and make the government payout all accidents.

still stands.

Private insurance companies would benefit if the blame/cost can be foisted on the other company. This fighting over who has to pay increases the overall cost of a private system.

I could look at those same actions and interpret them differently: the haggling provides consequences to people for their actions behind the wheel.

[White Doors]

I have private insurance.

I have my 4 year old car completely insured for collision etc and my house too - full coverage. I pay $1100 per year. Tell me again why you like government insurance?

[Technocrat]

ummm how about because im a male driver 25 years old and pay basically 2 grand a year... im sorry but those rates are just freakin rediculous. My beef is that when your young you have to pay a rediculously high premium. I shoped around and the best rate i could get with a clean driving record is $168/month. The other rediculous thing is that i live 45 minutes out of the GTA yet some genious in the insurance industry decided that Guelph = Toronto... and you can't do a damn thing about it.

I would welcome a public insurance system in ontario... these prices are just getting silly.

[geoffrey]

In Alberta, there has been a few mandatory reductions in premiums. The government knows we are getting screwed, and are doing their best to enforce the rules. The collusion is horrendous. There are a few good options out there though, ING insurance (through a local broker) saved me half what I was paying through Meloche Monnex.

Most providers are in line with Meloche in rates, so it's rather ridiculous. The collusion is very apparent.

[Wilber]

One thing that bugs me about ICBC is that government has gradually made it the God of all things automotive. It started out as just an insurance company but now it looks after driver licensing and testing as well as vehicle licensing. This is typical of government operations. They start off by setting up an agency to do one thing then channel a bunch of other government functions into its mandate. This is not a partisan view, all our governments have been guilty of it since ICBC was formed.

Canada Direct with whom I get all my optional coverage offers a collision avoidance course from Driving Unlimited, an outfit who works with groups such as the BMW, Viper and Corvette owners clubs as well as giving racing training. It was a one day course costing me 60 bucks. The normal price is $150, the rest subsidized by Canada Direct. For taking the course I get a 10% discount for 5 years. I more than recouped the cost of the course on the first renewal. ICBC offers nothing for improving your skills, they put all their faith in testing instead of good training.

[Wilber]

The private auto insurance industry wastes a lot of money arguing with other insurance companies about who is at fault for any given accident. Publicly run insurance companies don't have this expense and can offer lower premiums as a result.

That is one problem with public insurers, they can assign blame wherever they want and the insured has no recourse because there is on one to act for them, unless they hire a lawyer to fight their own insurance company. A win win for them is to assign blame 50/50 so they can raise both drivers rates.

[theloniusfleabag]

The government knows we are getting screwed, and are doing their best to enforce the rules. The collusion is horrendous.

I know geoffrey to be pretty right wing, so I see this case as an example of why 'free enterprise' (and anarcho-libertarianism) is flawed. The private insurers are colluding and fixing prices, something which sould be highly illegal, but it hasn't been proven in court. For the insurance industry to announce record-breaking profits at the same time as crying about capping payouts should really ring on deaf ears.

The average Joe is a bit screwed in Alberta, directly because of privatization in this case, because people arte compelled to have insurance by law. If there was an anarchist system, they could still do what they do through monopoly, as there would be no laws against that.

There are a few good options out there though, ING insurance (through a local broker) saved me half what I was paying through Meloche Monnex

I had a customer who recently had a very bad experience with ING. Even their promised letter of apology is now overdue. Insurance companies likely pay more to lawyers and 'experts' to get out of paying claims than they spend on satisfyng them.

A personal note: I was paying something like $300/year for 2 vehicles ($150 each! though both older) at one time, but sold them and took the bus to work for about a year. Then I found out that if one does't have insurance for a consecutive 6 months, you become rated as a 'first time driver', and pay the highest premium they have. It was $2400/yr (Note, you didn't have to drive for 'practice' in those 6 months, or even any amount of time, and you don't get re-tested... your sin was not paying them) After calling several brokers, I was told that there was nothing to be done...there was only one insurance carrier that insured first time drivers. One! How's that for competition! I also heard several of them give me different times as to how long a 'first time driver' carried that stigma. First they told me 3 years. Then after 3 years, I went to renew and asked for my discounted rating (another note, I was driving since I was 16, and am now 39, with only that 1 year break in driving)...and they said, "No, it has been changed to 4 years." Next one I called, I told them I had been 're-insured for 4 years, and they said "Oh, sorry, it has been changed to 5 years".

BC and Sask have far better auto insurance, and people I have met in Calgary from those places hang on to their 'out-of-province everything' as long as they can, and all have said 'Boy, do you get screwed in Alberta'.

[Charles Anthony]

The government knows we are getting screwed, and are doing their best to enforce the rules. The collusion is horrendous.

How can you be sure of collusion?

If you and I both sell lemonade on the same street, is it collusion if I raise my price immediately after I see you post a price increase of your own?

I see this case as an example of why 'free enterprise' (and anarcho-libertarianism) is flawed.

Flawed?? You just do not like the outcome.

If it is flawed, what is the criteria by which it should be perfect?

The private insurers are colluding and fixing prices, something which sould be highly illegal, but it hasn't been proven in court.

Proving collusion is often dificult because it rarely occurs. Collusion is not necessary among intelligent people who work in the same market.

[Riverwind]

Flawed?? You just do not like the outcome. If it is flawed, what is the criteria by which it should be perfect?

The insurance companies abuse their power as sellers of an essential service and create ridiculous rules that extort money from people who have no choice but to pay. This is the free market at its finest - if you have power then use it to screw your fellow man.

[geoffrey]

A personal note: I was paying something like $300/year for 2 vehicles ($150 each! though both older) at one time, but sold them and took the bus to work for about a year. Then I found out that if one does't have insurance for a consecutive 6 months, you become rated as a 'first time driver', and pay the highest premium they have. It was $2400/yr (Note, you didn't have to drive for 'practice' in those 6 months, or even any amount of time, and you don't get re-tested... your sin was not paying them) After calling several brokers, I was told that there was nothing to be done...there was only one insurance carrier that insured first time drivers. One! How's that for competition! I also heard several of them give me different times as to how long a 'first time driver' carried that stigma. First they told me 3 years. Then after 3 years, I went to renew and asked for my discounted rating (another note, I was driving since I was 16, and am now 39, with only that 1 year break in driving)...and they said, "No, it has been changed to 4 years." Next one I called, I told them I had been 're-insured for 4 years, and they said "Oh, sorry, it has been changed to 5 years".

BC and Sask have far better auto insurance, and people I have met in Calgary from those places hang on to their 'out-of-province everything' as long as they can, and all have said 'Boy, do you get screwed in Alberta'.

Agreed. The price difference is amazing. Sure, it may be tax funded to some extent, but this is one case where I think the government can provide far superior services than the private sector. Think about how much cheaper it is to spread the risk over the 2 million Alberta drivers compared to the 50,000 clients that a mid-sized company has. Not mention everything would be much more transparent.

If you and I both sell lemonade on the same street, is it collusion if I raise my price immediately after I see you post a price increase of your own?

Perfect competition doesn't work that way. We'd see near rock bottom rates... as long as someone could do it cheaper, they would, and gain the customers. Like I said, I pay half with ING as I did with Monnex, same coverage. Why do I find it difficult to believe that ING has half the costs of every other insurance company I've got a quote from?

The collusion is very evident. The government forces a reduction, and the companies turn billions still in profit. There is no price competition at all... we see new players like ING insurance coming in low... and yet 90% of the companies retain their high prices.

Hmm...

The insurance market, at least in Alberta, is very far from perfect competition.

[Charles Anthony]

This looks too much like a set up but I will bite.

The insurance companies abuse their power as sellers of an essential service and create ridiculous rules that extort money from people who have no choice but to pay.

I am in total agreement. The only thing I would like to add to the above is that you mispelled insurance companies: it should be G_O_V_E_R_N_M_E_N_T_S instead.

This is the free market at its finest - if you have power then use it to screw your fellow man.

Wrong.

This is government-cronyism (or blind-submission-coersion) at its finest - if you have the power of government on your side, then use it to screw your fellow man.

The government forces people to have car insurance and the government dictates the rules. That is not the free market. Your attack on the free market is invalid. When industry is in cahoots with government, it is not free market -- you know that.

You attack freedom but hide cronyism. What exactly do you oppose?

Think about how much cheaper it is to spread the risk over the 2 million Alberta drivers compared to the 50,000 clients that a mid-sized company has.

You are not spreading risk -- you are spreading cost. If that is what you want, my proposal in post #6 still stands:

It would be cheaper just to raise all of our taxes and make the government payout all accidents.

We would do better to forget about insurance companies altogether, right? Do you dare to counter my proposal?

I might add that we could do the same with the personal computer and the pet supply and the hoola-hoop industries: raise everybody's taxes and the government warehouse can provide us with personal computers and pet supplies and hoola-hoops whenever we needed them.

Not mention everything would be much more transparent.

Transparent?? What do you want to see??

All you need to see is a price so that you can compare.

If you and I both sell lemonade on the same street, is it collusion if I raise my price immediately after I see you post a price increase of your own?

Perfect competition doesn't work that way.

Of course not but the concept of perfect competition is irrelevent.

Like I said, I pay half with ING as I did with Monnex, same coverage. Why do I find it difficult to believe that ING has half the costs of every other insurance company I've got a quote from?

You may be right. However, they may simply have more available money.

Why do you not ask yourself: why did it take ING so long to get into our market??? The answer to your "perfect competition" problems are found there.

Ask yourself: what barriers to competition prevented ING from being in our market all along???

What role does your government play in the financial market?

The collusion is very evident. The government forces a reduction, and the companies turn billions still in profit. There is no price competition at all... we see new players like ING insurance coming in low... and yet 90% of the companies retain their high prices.

High prices and profits are not evidence of collusion. In my lemonade stand example above, are we colluding?

The insurance market, at least in Alberta, is very far from perfect competition.

Why should it be anyway??

When you say above "we see new players like ING insurance coming in low..." makes me ask: why would you have a government step into this market (and have all tax-payers responsible for paying its freight) if you are seeing evidence of growing competition within the market????

I am reminded of an Industrial Arts class introduction to drafting three dimensional objects. The teacher opened by asking us to imagine four people each standing around a four-sided building. Each one would draft a sketch of the building but each sketch would be different. However, each one are looking at the same building.

I am also reminded of my father's amazing collection of amateur photographs. He has a unique habit as a tourist: he would photograph statues and monuments and various attractions from behind. We can always get picture books and postcards but, we rarely get to see the whole picture.

[White Doors]

ummm how about because im a male driver 25 years old and pay basically 2 grand a year... im sorry but those rates are just freakin rediculous. My beef is that when your young you have to pay a rediculously high premium. I shoped around and the best rate i could get with a clean driving record is $168/month. The other rediculous thing is that i live 45 minutes out of the GTA yet some genious in the insurance industry decided that Guelph = Toronto... and you can't do a damn thing about it.

I would welcome a public insurance system in ontario... these prices are just getting silly.

No thanks. I paid my dues when I was young so you can too. Don't ask me to pay for your age groups higher risks AGAIN.

[White Doors]

A personal note: I was paying something like $300/year for 2 vehicles ($150 each! though both older) at one time, but sold them and took the bus to work for about a year. Then I found out that if one does't have insurance for a consecutive 6 months, you become rated as a 'first time driver', and pay the highest premium they have. It was $2400/yr (Note, you didn't have to drive for 'practice' in those 6 months, or even any amount of time, and you don't get re-tested... your sin was not paying them) After calling several brokers, I was told that there was nothing to be done...there was only one insurance carrier that insured first time drivers. One! How's that for competition! I also heard several of them give me different times as to how long a 'first time driver' carried that stigma. First they told me 3 years. Then after 3 years, I went to renew and asked for my discounted rating (another note, I was driving since I was 16, and am now 39, with only that 1 year break in driving)...and they said, "No, it has been changed to 4 years." Next one I called, I told them I had been 're-insured for 4 years, and they said "Oh, sorry, it has been changed to 5 years".

BC and Sask have far better auto insurance, and people I have met in Calgary from those places hang on to their 'out-of-province everything' as long as they can, and all have said 'Boy, do you get screwed in Alberta'.

Agreed. The price difference is amazing. Sure, it may be tax funded to some extent, but this is one case where I think the government can provide far superior services than the private sector. Think about how much cheaper it is to spread the risk over the 2 million Alberta drivers compared to the 50,000 clients that a mid-sized company has. Not mention everything would be much more transparent.

If you and I both sell lemonade on the same street, is it collusion if I raise my price immediately after I see you post a price increase of your own?

Perfect competition doesn't work that way. We'd see near rock bottom rates... as long as someone could do it cheaper, they would, and gain the customers. Like I said, I pay half with ING as I did with Monnex, same coverage. Why do I find it difficult to believe that ING has half the costs of every other insurance company I've got a quote from?

The collusion is very evident. The government forces a reduction, and the companies turn billions still in profit. There is no price competition at all... we see new players like ING insurance coming in low... and yet 90% of the companies retain their high prices.

Hmm...

The insurance market, at least in Alberta, is very far from perfect competition.

Hey, I hate Insurance as much as the next guy. but I have cheaper insurance than anyone I know from BC or SASK. Yes, there are flawa in the system that can be fixed - but calling for the government to com ein and take it all over is like asking your mommy to make you a hot chocolate becuase you have a tummy ache. That very attitude is what is so wrong with where this country has gone.

[Riverwind]

The only thing I would like to add to the above is that you mispelled insurance companies: it should be G_O_V_E_R_N_M_E_N_T_S instead.

It is not the governments that are extorting money. It is insurance companies operating in a competititve environment where the gov't allows them to do whatever they want.

This is government-cronyism (or blind-submission-coersion) at its finest - if you have the power of government on your side, then use it to screw your fellow man.

The government has nothing to do with the petty extortion that the insurance companies engage in. This is a pefect example of how unfettered capitalism will enourage companies to screw other people because it is profitable.

The government forces people to have car insurance and the government dictates the rules. That is not the free market. Your attack on the free market is invalid. When industry is in cahoots with government, it is not free market -- you know that.

Nobody with something to lose would ever consider driving without insurance even if the gov't made it optional. Auto insurance is a essential service to matter regulations the gov't has and the companies know that and will abuse their power if the gov't is dumb enough to let them.

You attack freedom but hide cronyism. What exactly do you oppose?

There is no freedom in allowing an unfettered market to take people's freedom away though price gouging and extortion. Provinces with single government insurers provide better service at a lower average cost.

[Riverwind]

I have cheaper insurance than anyone I know from BC or SASK.

I would likely pay less in a purely private system because I currently am in a low risk group. However, I know that status would only last as long as a $500 fender bender on icy roads where I don't even make a claim. I would rather pay more now if that means I will not be subjected to extortion because of some random event in the future.