My auto insurance just came up for renewal. Along with a form letter from my broker thanking me for my business, the renewal premium quoted by my insurer of ten years was high, or higher than I believed that it should be.
Despite knowing that I should shop around, the thought of conducting internet searches, calling 24-hour quote lines, and approaching three or four brokers, who each represent different insurance companies, to obtain competitive quotes, simply exhausted me. In all honesty, I'm irritated that I have to do all this work to find savings for a product that, by law, I must purchase.
At times like this, having less choice but an easier process, sounded tempting. I asked myself: Can a good case can be made to introduce government run auto insurance in Ontario, or any other private auto insurance province for that matter? According to the Insurance Bureau of Canada, the public voice on behalf of private insurance companies, the answer is a vehement "no;" but are they right?
Readers can check out the new IBC website at www.ibc.ca, which has been revamped into a much more user-friendly format. In the section about car insurance, the IBC takes direct aim against the government-run auto regimes that currently exist in British Columbia, Saskatchewan, Manitoba, and partially in Quebec. Amongst the several negatives cited, the IBC states that the government continuously bails out such systems, or policyholders pay steep premium increases to make up the shortfalls. More importantly, the overall coverage and services provided are inferior.
According to the IBC, private insurers offer the best option for insurance buyers. Not only are they fiscally responsible, they develop new products, provide employment, pay taxes and overall, provide superior customer service. They take this one step further by pointing out that competition saves money. For example, since deregulation of phone and cable services, the cost for such services has decreased. The IBC omits to mention that in comparison, the cost of auto insurance has increased while rights to certain compensation have decreased.
Over the years a number of provinces have flirted with idea of introducing government insurance, or have used it as a threat to make private insurance companies act more responsibly. Ontario did this under both the Liberal and NDP governments and currently, New Brunswick is using this possibility to negotiate a better deal with their own private insurers.
This probably explains why the government-run auto insurance websites for the applicable provinces, paint a completely different picture than the one offered by the IBC. From a longevity perspective, this system was first introduced in Canada in the 1940s when the Saskatchewan government waded into the insurance business. Despite the IBC suggestion that such systems are fiscally irresponsible, the Saskatchewan and Manitoba operations have been so successful that they now own profitable private insurance companies in other provinces, which ironically are members of the IBC.
Government-run auto insurance premium is frequently lower than that offered by private insurance companies, which the IBC suggests is partially due to the system being subsidized by taxpayers. Objectively however, it stands to reason that a single system should achieve better cost savings than multiple insurance companies, each requiring several levels of management to develop and support their own enterprises that are all competing for consumer dollars. If this were not the case, why would companies merge in order to be more viable?
Over the next few weeks, I will be comparing the differences between government-run auto insurance and private insurers. Readers can decide for themselves which option they prefer.
Susan Saksida, CIP is an Insurance Consultant. Questions or comments can be emailed to insurance compliancematters@rogers.com
Microsoft VBScript runtime
An exception occurred: 'hz.next'
/_website/pagebase/article.asp, line 344