On insurance and economic development

Just a quick follow up to my previous, somewhat forceful, blog on auto insurance.

I am not advocating that governments do nothing when a key cost of living component such as auto insurance (or electricity or gas for that matter) escalates out of control as auto insurance rates did in 2003 and early into 2004.

I think it is the governments role to work with industry and other stakeholders to determine the source of the problem and take steps to address it.

However, I think a province such as New Brunswick must be ‘open for business’ – in the generic sense of that word and I used to think that the New Brunswick Liberal Party understood this.

It’s not about shamelessly doing whatever industry says at the expense of the environment or New Brunswicker’s disposible income. But it is about taking a collaborative approach to addressing these issues again be it insurance or the environment or energy or the forestry for that matter.

Grand standing about the evils of big business is the role of the NDP – not the Liberals or the Tories. If the auto insurance system had been cartelized pushing out competition and arbitrarily raising rates that lead to the gouging of consumers – then I would also support a public system.

But the reality is that the auto insurance system was out of control in New Brunswick before the government reforms. It was called ‘auto lotto’ and more than one person reading this blog knows what I mean.

When you have a select group of people abusing a system for personal gain at the expense of society -then government needs to step in and rectify the situation. But I would submit to you that the bad guy here wasn’t the insurance industry (although they are not exactly paragons of virtue either) but those profiteers that wanted to unduly benefit at the expense of everyone else in society.

Auto lotto has been curbed. Rates are coming down and competition is coming back into the system.

My frustration, again, was with the Liberal Party’s position on this. Leave the anti-big business rhetoric to the NDP. The Liberals and the other mainstream party inNew Brunswick should be about collaboration with industry on the economic development of this province and not about the socialization of industry to appease a perceived political end.

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0 Responses to On insurance and economic development

  1. vivenewbrunswick says:

    First, let’s be clear on something that Shawn Graham already knows, which is that under the Competition Section of NAFTA, provinces CANNOT create new public utilities which will compete with the private sector. If they did they’d be sued by every insurance company in the US, many of which are subsidiaries of the canadian insurance companies.

    Second, as a volunteer for the CAC I DEEPLY resent the implications that the organization is somehow in the pocket of unions. It is one of the few volunteer run-and solvent, organizations in the country. For auto insurance, the facts speak for themselves (and you’ll note that Manitoba, Saskatchewan and BC have a better track record on investment than NB and they ALL have public insurance):

    -insurance premiums were raised by 50% in NB in 2002, while in Man, Sask., they increased by .5 and 4% (statistics canada).
    -numbers of collisions continue to decrease
    -insurance companies arbitrarily added consumers to the ‘high risk’ category. They fessed up to this and promised in 2004 to ” remove 7,200 New Brunswick drivers from the high-risk, high-cost Facility Association by August, 2004.
    -rates were increased even on people who had had no claims or comments, even though they still had the same vehicle

    As you say, clearly this is a political gambling tool, but one that is WOEFULLY stupid. Lord seems universally despised by every New Brunswicker I’ve ever spoken to, and to promise something that he clearly can’t deliver is beyond stupid.

    As we know, there is very little real difference between the liberals and the tories. I suspect Graham knows this is one thing that resonates with voters and won’t tick off the Irving overlords. You can’t pick any of the other ‘hot’ topics, like LNG, toll highways, energy, or natural resources, they have heavy Irving and corporate interests.

    I always find it ironic that the hue and cry is always for ‘more privatization’ and ‘user pay’ UNLESS it comes to highways. Gee, is that a coincidence?

    As for car insurance, take a look at the legislation, rates ARE going down-for some, but it’s mostly because they are getting far fewer services (known as ‘no frills’. Public insurance doesn’t have the profit motive built in, while many will attest to government ineptitude and inefficiency, anybody who has worked in the insurance industry knows they exist there as well, and with the profit motive makes consumers far worse off-breaking even is far better than an unlimited profit motive.

    As for the “auto lotto”, the best way to curb this is with public insurance. Take a look at Manitoba’s constant commercials and services designed to keep drivers from accidents and protecting their investments.

  2. David Campbell says:

    If you will state unequivocally that CAC does not receive funds from the ICBC union or other unions that have a vested interest in this issue, then I will retract my comments. Otherwise, they stand. I have no problem with union’s funding lobby groups but I DEEPLY resent (in your words) any lobby group that is secretly funded by either unions or business and then claims to be an inpartial, unbiased organization on the ‘side’ of consumers.

    And I reiterate that I don’t think it should be the government’s role to nationalize/socialize industries – especially one like this that is so regulated.

  3. vivenewbrunswick says:

    You misunderstand me (my fault, I didn’t mean “run” as in “led”), what I meant was that it is clearly ludicrous to claim that the CAC is in the pocket of unions. The CAC only has around 4000 members, and receives the vast majority of funding from government. ‘We’ do good work, but I’ve never seen ‘unbiased funding’ anywhere.

    For an example simply look at how the CAC has NO problem with voluntary labelling of GMO’s, even though 9 out of 10 consumers polled in favour of mandatory labelling. Many lobbied heavily to abandon this position, but the biotech industry (Monsanto, Aventis, etc.,which essentially forms the agricultural branch of government) is simply too powerful. However, there are different chapters, the BC chapter refused to partake in that “lobby”. This made the CAC the ONLY consumer organization in the world to take such a stance on GMO’s.

    If you need some backup info, the CFIA (responsible for food safety), paid the CAC $70,000 for a number of food related studies. Clearly, the group is not in the hands of unions.The bias then is similar to the CBC, where it gets money from government, yet even moreso than CBC it serves a function for government, namely acting as a conduit to consumers. Unless government has a position (as with GMO’s), it wants them as unbiased as possible, otherwise they are useless to them.

    As for auto insurance, if the NB government, or federal government wanted public insurance-they would simply do it. They wouldn’t have studies, they wouldn’t have meetings, they’d just say “we’re adopting Manitoba’s model of auto insurance”. Or they’d have those studies and THEN adopt it. Clearly if anything the insurance lobby has won out, as was easily predicted when their CEO’s came down from Ontario for a private meeting with Lord and he almost immediately discounted public insurance.

    Simply look at this from a political point of view. Even your blog, just an ‘independant’ worker guy talking about issues has adopted the ‘political line’ which is discussing how good or bad public insurance is. Of course most in the business world, if they aren’t getting too badly screwed are opposed to virtually all forms of socialization (except tolls it seems), and those who are getting screwed over see it differently. YET, Virtually nobody is discussing the REAL point that I made, which is that we don’t even have the power to adopt it EVEN IF WE WANTED TO.

    NAFTA completely precludes it, and many other forms of independant economic activity which would be helpful. Yet how often have you heard NAFTA mentioned in the paper lately? It is clear to most people from softwood just how arbitrary it can be, yet how often do we hear about it’s pervasiveness?

    In NB this is vitally important as it is the sole reason why NB hasn’t gotten any of it’s child care credits. Under NAFTA the money HAS to flow from government to private industry, which most provinces accept. In NB, for reasons too numerous to mention, the province wants some of the money to go to home schoolers, meaning it would be a truly public run enterprise, this is forbidden under NAFTA-so they get no money. Yet the discussion is NEVER supposed to be on NAFTA, so we hear that Lord and Martin are in different parties and all kinds of crap.

    I could go on for pages about public insurance and the public vs. private debate-but why bother? You might as well talk about whether we should socialize Irvings holdings. It’s the emporer’s new clothes, we are supposed to sit and argue about hypotheticals that can never occur rather than the sources of the issues themselves. I think listing all the things we can’t do would make an interesting blog.

    Finally, sorry to ramble on, but the one place where the province has no trouble confronting trade rules is in granting a huge tax break for Irving (and I think that has a HUGE impact on economic development as it clearly shows the province is as crooked as a third world country-which would send a lot of companies avoiding NB like the plague). If NB were ever sued by an Irving competitor, New Brunswicker’s would be the ones on the hook. What a wonderful world.

  4. David Campbell says:

    Maybe I shouldn’t have come down so hard on the CAC. I am not crapping on any of its work other than the auto insurance piece. If the BC Chapter of the CAC is getting funding by the union at ICBC to put out these ‘studies’ than I think the public has the right to know. You lefties are all about transparency and openness but I am not sure that your union colleagues share that view. Sorry for the dig but I just read a story today where Buzz Hargrove was highly critical of Toyota. Never mind the thousands of high paying jobs – if they are not unionized they are no good apparently.

  5. vivenewbrunswick says:

    Funding is one thing, but when you don’t know how much funding is coming in, you can’t discount studies just because you don’t like them. The argument that ‘they are biased’ because they got some money from a union is designed simply to stop analysis on the information.

    There is tons of stuff available on the web that backs it up though, so I don’t see how it’s any kind of conspiracy. I do agree that ANY study that doesn’t include methodology doesn’t even deserve to be read.

    And let’s stop with the “you lefties” comments, we know it’s derogatory and meant to be a slight. I’m a business man just like you and went to business school just like you.

    I just happen to think that the market should be used for the benefit of people, and that people shouldn’t be used for the benefit of industry. To tie it in with the comment on Newfoundland, I would simply take the mill owners out of the equation. Give it to the workers to run. Chances are pretty good that with only 400 employees they could make enough to cover their costs. Part of the mill could be used for other industrial purposes, and since the mill would only need to make about $1 million a year (operating costs plus $400,000 to the ‘owners’, which would be 100 grand each, which would stay in the community)
    it’s far better than the current deal, and no doubt better even than the previous deal.

    As for Buzz, he’s a union guy like most. Talking about loss of job security is certainly a valid point, no doubt he’s worried mostly about the workers he’s losing from GM, and Ford in the coming years-you may want to mention that in a blog-but it’s still a valid point.