CBC full frontal assault on auto insurance

I just don’t understand the CBC. I know a lot of the folks over there. I even do a commentary once in a while on CBC Moncton.

But their assault on auto insurance is just plain puzzling. They are running more stories on auto insurance than Al Hogan wrote on toll highways.

And why? Some have suggested it’s because Robert Jones is a left wing nut fanatic. I never met the man.

This must be a boon for the provincial Liberals but it makes no sense.

So for Robert Jones and company, here’s a little primer on insurance.

1. Why do we get insurance to begin with (forgetting for a moment that it’s required by law)?

We get insurance to mitigate against a major expense down the road like losing your life (life insurance), a car accident, your house burning down, etc. From year to year, by definition, insurance premiums paid will never be equivalent to claims paid out. By definition and even a CBC reporter should understand that. The industry apparently lost money for 6-7 straight years in New Brunswick during the late 1990s and early 2000s and Robert Jones didn’t do one documentary. Go figure.

2. Insurance rates are regulated by the New Brunswick Insurance Board that pours over reams of data (including trends and taxes paid) and then approves or denies the insurance rates.

The New Brunswick Insurance Board chairman Paul D’Astous is actually a good guy. A colleague of mine had to deal with him once and found him to be very knowledgeable. What possible rationale could the NBIB use to allow insurance companies to keep artificially high insurance rates for an extended period of time? Name me one reason?

If there is an imbalance between claims paid out and premiums paid – over time this will work itself out through competition and regulation.

The Insurance Corporation of British Columbia announced major premium increases for this year and next and is complaining publicly about the escalating claims costs (sound familiar?).

I certainly am not an expert on insurance but it seems to me that the reforms put in place have worked.

The last thing we need in this province is another massive government bureaucracy with Robert Jones as its President.

PS – And what’s up with the CBC quoting a lawyer?

Halifax lawyer and insurance critic Barry Mason said it’s a case of insurance companies not passing benefits of government auto insurance reform on to drivers, as promised.

The least credible industry by far on the issue of auto insurance is the legal industry. By far. Lawyers made tens of millions in profit at the hands of New Brunswick residents by pushing thousands of auto insurance claims in the late 1990s and early 2000s. There were dozens of lawyers who became millionaires off the auto insurance industry. And not one documentary by Robert Jones. Go figure.

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0 Responses to CBC full frontal assault on auto insurance

  1. to it and at it says:

    > I certainly am not an
    > expert on insurance
    > but it seems to me
    > that the reforms put
    > in place have worked.

    Been hurt in a car crash lately? The caps are ludicrously low.

  2. Anonymous says:

    You’ve got to be kidding. Not to put too fine a point on it, but if you can’t think of one reason why insurance rates would be ‘artificially high’ (to a corporation there is no such thing) then that’s almost the opposite of an expert on auto insurance:)

    I know public insurance finds no place here, that’s your business, but there’s a reason why three and a half provinces have it and are VERY happy with it. If you don’t think lobbyists are at work every day in those provinces trying to change that then you don’t know industries very well.

    Even in Ontario there was huge pressures to nationalize auto insurance, in fact every party for that last decade and a half has used it as a campaign platform to get elected, then of course jettisoned it once the insurance companies came knocking.

    If you have satellite television watch the Manitoba channel sometime. There are huge public initiatives to make driving safer, as well as tying it to the health care system.

    I’d love to see a list of how many millions anybody brings home after an auto accident. Insurance is simple legalized fraud. Most people know damn well there’s no point in even making a claim, its better to just pay it out of pocket.

    Just because an insurance company SAYS they didn’t make money means nothing. Talk to an accountant sometime, these corporations have financial levers all over the place to avoid paying taxes and making the books say whatever they want.

    If the ‘board’ were of any effect at all, then those 60% increases never would have happened. The board is useless. There is ZERO evidence that ‘it is working’ except that it is impossible to get an auto insurance story in the papers anymore.

    Contrary to opinions, the CBC at least has a lot of facts. Like that less than 1% even use the discount rates.

    And the point about losing money is simply this. The auto premiums were increased over 55% in one year, do you honestly think that in that one year insurance companies had to pay out 55% more? Go take a look at highway accidents and let us know which year exactly saw 55% more accidents.

    As for the bureaucracy, thats easy to say when you have a job. Ask somebody whether they’d want a government job or a job at Clarica and see what answer you get.

    Let’s do a comparison:

    Educational system: suffering from lack of funds but relatively inexpensive compared to other jurisdictions

    Health care system: for its size the government is quite adept at health care, except where private interests become involved.

    Let’s compare that ‘bureaucracy’ to, say, the lumber industry (which by the way is still a bureaucracy, and still costs taxpayers): After eight years of benefitting from duty free status in relation to the embargoes for the rest of canada, the year the duties are dropped, the industry announces that it will go belly up without massive government handouts. Companies rejected union, environmental and governmental committee recommendations to stop making pulp over a decade ago, yet now will do so at the taxpayers expense.

    And people think the bureaucracies in the government are bad?

  3. David Campbell says:

    Not all government bureaucracies are bad. Government plays a critical role in society. But government running industry is not a good idea.

    There hasn’t been a new public auto insurance system in 30 years. I am told that Gordon Campbell looked at reprivatizing the ICBC when he came into office.

    Saying insurance is legalized fraud is ludicrous. When was the last time you evaluated life insurance? How about home insurance? How about reinsurance? You people would be aghast with reinsurance. Companies pay billions each year in reinsurance premiums and never see a nickel. The spread between premiums and claims on a year to year basis is astronomical. Robert Jones would be breathless. But when a hurricane hits, the reinsurance firm has to pay out billions.

  4. David Campbell says:

    Look it. There’s a role for government here. The insurance industry is not run by Mother Theresa. But that role is in the monitoring and approval of premiums through the NBIB. We have to trust that these guys know what they are doing. You people have so much faith in a public insurance bureaucracy, then trust the public servants that are monitoring the industry in the NBIB.

  5. Anonymous says:

    Trust in bureaucracies and bureaucrats is an oxymoron. I am quite well aware of reinsurance and am a certified insurance salesman. I got out when I was ‘promoted’ and got to see what really goes on.

    The choice is really quite simple. Simply look at those three systems, break them down to their component parts, and ask voters which they want. It’s as simple as that. I know the Manitoba system quite well, and while there are plenty of people who despise it, there is enormous support for it. In this day and age you don’t keep a nationalized system around unless people REALLY want it, because there are huge lobbying forces designed specifically to change those systems to market based (which it sort of still is)

    In fact, like health care, a nationalized system of insurance helps companies keep costs low. In New Brunswick its a bit of stretch for one simple reason-most industry is in two hands, and suing Irving or McCain would be absolute madness and everybody knows it. So when you get hurt working for Irving, there isn’t a hell of a lot you can do. Sure, you can sue, good luck with that.

    But of course there is no distinction between ‘industry’ and ‘government’, we know that for a fact, all you have to do is look at the lumber ‘industry’ which is a cash cow giveaway from government.

    There are thousands of permutations and combinations for aligning government and industry. Don’t think industry runs government in NB? Take a look at legislation, NB passes maybe 13 pieces of legislation a year in a society which is facing rapid changes on all fronts. Compare that with Ontario where there are hundreds of pieces each year. And more people doesn’t matter, if you need a new housing act, you need it whether you have a hundred people, or a million people.

    The danger is of course the ideology. Many people won’t even discuss the issue, or much, because it is ‘government’. Those are generally people who don’t rely on government much, who may even see it as a hindrance. That’s fine, although somewhat selfish. The point to a functioning government would be, well, find out how many people WANT public insurance and why. What are the companies, none of whom have come close to bankruptcy by the way, in fact in the early nineties legislation was put into place after the ALberta debacle to protect their interests, what are they doing that is ‘bad'”

    Well, to stop that you do ( I think) what Graham says, which is ‘work with us or get the f*** out. That way, you can do ACTUAL legislation, not cover the books, as Lord has done.

    To what extend what Lord did ‘worked’ I haven’t seen. Market changes and the threats of public insurance made insurance companies make some slight changes in some policies, but not much.

    As for the ‘organized fraud’ charge, just hit your local library, there are dozens of books in it on the insurance industry, its ties to organized crime, money laundering, international terrorism and lots and lots of fraud. PS, you can do the same for the canadian banking and mining and forestry industries too.

  6. Anonymous says:

    ‘it seems to me that the reforms put in place have worked…’

    Just a question. Would you claim a $1000 fender-bender? Because most won’t nowadays.

    So why are we paying ansurance?

    One fender-bender would change your mind…(I’m not wishing this on you of course). Just saying.

  7. David Campbell says:

    You know what? I think you guys make some valid arguments but you still haven’t convinced me of two things:

    1) Why a publicly run auto insurance system is better than good legislation/regulation? Even if all your claims are true – it still would seem to be a lack of good regulation and systems.

    2) What are you projecting to the global business community when you nationalize industries? I know there are some posters to this blog that don’t really give a rip about what the ‘global business community’ thinks about New Brunswick – but I do.

  8. Robert Jones says:

    David:

    Good to read your discussion of auto insurance and I’m sorry we’ve never met.

    I can often be found at Roger Surette’s Golf Central on Mountain Rd when I’m in Moncton. We can grab a beer at Boston Pizza and I’ll bring my auto insurance file and make a believer out of you.