Following the comments made by the Consumers Association of Canada on the need for Ontario to embrace a publicly-funded auto system, brokers and drivers from across the country have sounded off on what does and doesn’t work.
What lies at the heart of the issue of auto insurance in Ontario is what constitutes a fair premium, says Greg Shields.
“What we really need across Canada is a fair determination of insurance premiums,” says Shields. “Age, gender, postal code, etc. are indirect determinants of loss, but at least they are more fair than charging the (indirectly) good driver classes and charging the taxpayer for the losses of the (indirectly) bad driver. But ultimately, the only fair determinant of loss is actual driving behaviour.
“Governments need to have the guts to force people to put their money where their mouth is,” he says, and through technology – like a next-generation telematics product – a more accurate premium can be assigned.
Government-run insurance cannot be the answer, says Nick Kandiuk, the assistant VP of casualty at
A.M. Fredericks Underwriting Management Ltd.
See all the comments and the article that set off the debate, ‘Private insurance a rip off, says CAC’
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“A government bureaucracy – with all its inherent waste on top of the political agenda – will only make things much worse when compared to the competitive free market system,” says Kandiuk. “The reasons for Ontario's higher insurance premiums are clear for all to see: namely, the costs side of the equation has to be addressed; better traffic flow to deal with urban congestion which increases claims frequency, the rampant fraud, better control of the various claims costs, and distracted drivers.”
One driver who has been behind the wheel and insured on both coasts of the country, Faith Hakkarainen, says that from her experience a publicly-funded system doesn’t work.
“I have personal experience that moving to a government-run auto insurance program does NOT save you money,” says Hakkarainen. “When I moved from Halifax, N.S. to Victoria, B.C. my insurance went from $84 a month to $147 a month! Same car, same amount of insurance; Halifax is technically a bigger city and Victoria is on an island, but now I was under a government-run program that helps subsidize young inexperienced drivers.
“If I had my choice I would go back to my old private insurer in a heartbeat,” she says.
For Robert Beeston, the solution may be in incorporating the best in what each province has to offer.
“This isn't a situation where ‘more government is better because of Ontario auto premiums getting too high,’” says Beeston. “This is a situation where we need to really sit down and look at what works, what doesn't work, and come together across the country to develop a solution that involves the best of each model.”
A shared public/private system may be what will work, suggests Beeston.
“I believe that the best solution is a combined private/public system that requires all comers to purchase basic coverages through a government-run entity (and that in this day and age, the minimum TP liability amounts should be increased to at least $1 million nationally with nationally-mandated, consistently applied minimum splits between BI and PD),” says Beeston, “and that accident benefits and uninsured/underinsured motorist cover are a matter of national interest and therefore public responsibility.”
Looking at the Saskatchewan, B.C. and Manitoba models, Beeston sees what is and isn’t working. (continued.)
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“The ICBC (Insurance Corporation of British Columbia) and SGI (Saskatchewan Government Insurance) models in B.C. and Saskatchewan… allows the government to compete with and take dollars away from the private sector on ‘optional’ coverage. The private sector should not have to compete against government-run or crown corporations,” says Beeston. “My most recent experiences in Manitoba also tell me that MPI (Manitoba Public Insurance) locally may offer the best claims service and response in the country, so perhaps there are lessons to be learned in all jurisdictions, and these solutions perhaps should be driven nationally and delivered provincially.”
The real solution can be found in one province, says Scott Meadwell, where one aspect of the process has been removed entirely, saving the system millions.
“The solution is simple. You don't have to re-invent the wheel,” says Meadwell. “If you want lower premiums, amend the auto policy to reflect benefits that would be in place if government was signing the cheques.”
Meadwell cites the public liability car insurance in Quebec, which doesn’t allow lawsuits for people involved in car accidents, and which provides benefits that are much lower than in Ontario.
“Eliminate the ability to sue. Get rid of lawyers and punish scammers,” he says. “That is where the money is saved. It isn't by eliminating insurance company personnel who probably do more work for less pay, fewer benefits and less vacation time than the average civil servant.”
Perhaps the best indicator of the viability of the current system can be seen from the example of one bank that entered auto insurance.
“Remember CIBC jumping into the industry, and as soon as they started accumulating losses they decided fixed bank charges were much more lucrative?” says Marsha Jones Dooley. “Everybody hates the insurance man because it's a product with so many variables to understand and only valued when bad things happen.”
