The Telegram (St. John's)
To fix auto insurance, demand public system
It’s natural to feel a tinge of envy when you read about those guys who drove around, possibly for years, without insurance. You make your monthly auto insurance payment, and you can’t help but feel like a sucker.
The top industry seemingly set up to bleed the consumer is not taxes — at least taxpayers get something for their money, nominally — but auto insurance.
Then you realize that a lack of insurance is why you’re reading about that skeet and, oh well, you may as well keep making the payments.
The provincial government, specifically Service NL, wants the public’s input on its review of the auto insurance system. The Public Utilities Board has also been asked to conduct a review “to find solutions that will benefit the consumer,” according to a Service NL news release earlier this month.
Here’s an idea: stop giving insurance companies legal licence to vacuum money out of motorists’ pockets and bank accounts.
Name one other product the government dictates you must buy.
Being required by law, auto insurance is not subject to the usual fluctuations of supply and demand that could equalize benefits between producer and consumer. You must have it, so all the power is in the hands of the companies.
Everyone, it seems, has an auto insurance horror story.
A few years ago, I was miffed that Older Boy, upon becoming a primary driver so he could get to university, had to shell out $3,600 a year for insurance. That was significantly higher than his annual tuition.
So I called some insurance “competitors.” The first place I phoned was an outfit that boasted about having the lowest rates in the province.
“Your company advertises that it offers the lowest rates,” I said to the woman.
“It does?” she said.
It didn’t, so I called another “competitor.” Sure, we can insure your kid, for $4,000, they said. I dialled again. A third “competitor” could insure him for $6,000. Never mind. By that time, $3,600 looked like a bargain.
In March 2005, the PUB submitted an “Automobile Insurance Review Report” to the provincial government. The first line of the report reads, “Rapidly rising automobile insurance rates continue to resonate as a significant public and political issue.”
Here we are, 12 years later, and ditto. The government — Liberals, this time — once again wants input.
Here’s mine: if auto insurance is required by law, it should not be controlled by what is essentially a private monopoly, but should be a public system, along the lines of public health insurance.
Not surprisingly, this issue came up a dozen years ago.
“It was well understood by all participants that the board was not in a position to address the feasibility of public insurance during this review, but many supported a detailed study to examine fully its potential in serving future automobile insurance needs in this province,” the PUB report stated.
Hopefully, this time the PUB will put itself “in a position” to address the pros (lots) and cons (not many) of a public insurance system.
The insurance companies would, of course, wail and warn as they envision their illgotten, government-mandated profits declining.
They would have reason to gripe. According to the PUB’S 2015-16 “Automobile Insurance Annual Report,” the 51 auto insurers in the province billed premiums that year worth $398 million.
Oh, and the “private monopoly” referred to above? According to the report, “The market continues to show a high level of concentration, with 15 insurers writing approximately 92 per cent of all the automobile insurance business in the province.”
It gets worse: “When common ownership amongst companies is considered, there are four companies writing approximately 81 per cent of the automobile insurance business.”
If you are fed up and want fairness, demand a public insurance system.