Auto Service World
Feature   November 1, 2003   by Jim Anderson,Editor

Outrageous Insurance, Part 2

Last month, I commented on how the current system of privately run auto insurance has driven rates that threaten our industry directly and our standard of living indirectly in provinces like mine, Ont...


Last month, I commented on how the current system of privately run auto insurance has driven rates that threaten our industry directly and our standard of living indirectly in provinces like mine, Ontario. Unfortunately, the idea of letting provinces run auto insurance isn’t on the table in provinces without a centre-left political tradition, and that’s too bad, because there are advantages.

On the bottom line, (the average driver’s that is) it’s cheaper in B.C., Saskatchewan and Manitoba compared to other provinces, despite some pretty serious allegations of fraud, particularly in B.C. And it should be cheaper, since Provincial policing, medical and road maintenance assets can cooperate, sharing information as needed. Lots of fender-benders at a particular intersection? The insurance arm could flag the Transportation Department to put up a stop sign or traffic lights. Too many DUI accidents in a region? More enforcement, or even better addiction rehab facilities could be ordered now, not years down the road. Insurance companies shouldn’t mind, since they’ve been telling us for years how they can’t make any money in writing auto policies anyway. I suspect that one reason why it won’t happen in places like Ontario is fear of the precedent it would set. What if it works? The logical extrapolation then is to look at another job and growth killer: skyrocketing business insurance rates. Workman’s compensation plans were designed to control risk and promote safety and regardless of what you think of them, the liability for an employer in an industry like ours, with lifts, flammable liquids, carcinogenic compounds, fumes, explosion hazards, etc. could be colossal. Take a look at what you’re paying now to cover fire, theft, loss of business, employer and public liability, then ask yourself: is it reasonable? When was the last time a garage burned down, or a technician was seriously injured or died on the job? It’s rare enough to be a major story. Just getting reasonably priced business insurance can be difficult in many provinces. If this trend continues, it will accelerate the decline of the smaller shop in favour of major chains and new car dealerships, who have serious negotiating leverage. Everyone will lose, from the consumer, smaller shop owner and employees and even the majors who rely on local specialty shops to handle the unusual jobs. Of course, like the proverbial frog in a pot, the slow death of smaller businesses won’t be noticed until it’s too late. On the insurance side, provincial governments need to look at the multi-million dollar payouts and huge legal “transaction” costs that drive rates through the roof. A salary cap saved the NBA; maybe a claims cap could keep small business insurance rates in line.

Of immediate importance is the high cost of auto insurance, because there are only so many dollars in the consumer’s wallet. We need enough of them in reserve to pay for repairs and maintenance, because if insurance gets too expensive, the car count will drop, meaning fewer dollars for us.

At least by running it provincially, the premier can get immediate feedback from the electorate at the ballot box if cost and rates are going through the roof. That kind of democracy means a lot more to the average Canadian than how many refugees we admit or whether or not we should allow gay marriage. Of course there’s always the possibility that that’s why we’re hearing so much about issues that don’t affect our standard of living: so that these increases can slip through without any accountability from politicians. But that would sound like a conspiracy theory, wouldn’t it?


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