Auto insurance deal announced

I suspect that for some folks, nothing the government does short of socializing insurance will be acceptable.

But for me, this deal looks like a good start.

A deal has been reached between the insurance industry and the provincial government that will see premiums drop by an average of 13.5 per cent by March 1, 2007. The reduction in premiums will result in savings of over $50 million for New Brunswick automobile insurance consumers.

As promised in the Charter for Change, gender has been eliminated as a rating criterion in 2007, and existing territories will be eliminated by 2008.

For those of you cynics, this in my opinion was the best deal for the Liberals. The Tory reforms had already started to show some effect. Yes, they are not perfect but given the situation I think gettting another 13.5% cut makes sense.

But ultimately, rates should be based on market risk and conditions and the PUB is the right venue to ensure this happens.

Remember back to the start of the crisis, the insurance industry premium increases were approved by the board because when the board saw the raw data, the increases made sense. What was needed was a structural redesign of the system and that has been done.

Let’s get on with much bigger issues such as having people in New Brunswick at all to actually drive cars that will need insurance in the first place.

I have it on good authority that Graham has been actively promoting NB to the finance and insurance sector just since he has been elected. Hopefully the goodwill has carried over and the province could attract at least a small fraction of all the business going to Nova Scotia these days.

If you want to post comments about Graham ‘backing down’ or want to dredge up comments he made in the past – you are welcome to. But my position on this stuff is getting clearer as the days go by. Sometimes it takes a bigger man to admit changing his opinion than forcing through a bad idea because you are too stubborn to change. George Bush won’t admit he was wrong for that very reason. If I was advising GWB, I would tell him to do a mea culpa. To admit things went very badly in Iraq and that he wants to start over.

But he won’t change his ‘opinion’.

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0 Responses to Auto insurance deal announced

  1. scott says:

    Wow, for once in my life I’m at a loss for words.

  2. Anonymous says:

    This was hardly a surprise, anybody that thought New Brunswick was going to go up against southern ontario and european investment/insurance firms was really a diehard NDP, and we know how many of those there are.

    However, that they only got 13% drop is unfortunate, and sends a clear signal that not only are they not willing to fight, they will actively roll over.

    The PUB was completely ineffectual like most government overseeing bodies. The fact that New Brunswickers were paying twice the premiums of places with public insurance says it all.

    The insurance companies even publicly said that the reason for the increase was NOT New Brunswick drivers. Lawsuits are practically nil, and accidents have been decreasing. It was bad investment, particularly the asian markets that pumped up prices in canada, the companies SAID this. So to try to make it sound like New Brunswick drivers were markedly different than Manitoba drivers and so deserved 50% increases simply can’t be substanciated.

    But of course governments operate by the laws set down in Catch 22. When you’ve been screwed make it sound like its an absolute miracle and ‘just what we are looking for’.

    But you are right, for many nothing short of public insurance will do, and for good reason which we don’t need to go over yet again. Unfortunately, that group which USED to have representation and even elected a party perhaps in large part due to it now has no representation at all.

  3. Anonymous says:

    Get ready to pay higher house insurance…

  4. Anonymous says:

    Oh thats funny!

  5. Anonymous says:

    Just as another aside, we should note that there are many different forms public insurance can take, and that there are people out there who won’t accept ANY form of public insurance. Ideology is funny that way.

  6. David Campbell says:

    Yes, ideology can be a funny subject. I have said on numerous occasions that the public needs to step in when the market is not functioning properly. I am not a rabid capitalist. I was never convinced that structurally, a government organization could run a better auto insurance system. Even the model the pro-public insurance advocates cite all the time, the ICBC, bases much of its underwriting criteria, new product development, etc. on the private sector. The public sector should look after the public interest not run industry. But industry should be structured such that there isn’t excessive profit and the gouging of specific groups with society. That’s trickier than it sounds. If they eliminate regional disparities and age/gender disparities from the actuarial calculations than the New Brunswicker that has a clean record, is of a certain age and lives in a certain city will pay more than he would have otherwise.

    However, this opens up the much broader discussion of ‘fairness’ in liberal democracies. And I have no inclination to go there. As I have said – governments exist to take from one and give to another.

  7. Spinks says:

    Better than spending millions (we don’t have) on setting up a public system. The Tories were onto the right formula anyway. Insurance rates went down, unless of course you were a reckless driver.

  8. Anonymous says:

    Only averages went down, yet they still didn’t go down to previous levels. The simple fact is as you say, government steps in when industry gouges people, which is what is being done. It does have to do with ‘fairness’ though, but that isn’t the provincial governments fault, it is the federals signing of NAFTA.

    So for example, the problem I cite is that billions of NB money is fleeing NB yearly in premium payments (and again, that is far more than the measly millions it would take to set the system up, that money is easily recouped as governments have excellent credit ratings and NB has far less debt than say, Nova Scotia, so its far from unmanageable).

    Many New Brunswickers have their insurance locally, but not that many. So say the government set up a program that favoured people who got insurance from a local caisse populaire or credit union affiliate. That would accomplish much the same thing, anybody stupid enough to send their money to ontario deserves to pay more tax.

    Places in the states do this all the time, and they are far more on the capitalist train than canada. However, thanks to free trade they are not allowed to do that. Coincidentally, since free trade doesn’t touch state governments they do this sort of thing all the time, even adding different levels of taxes on different industries.

    So these changes essentially just mean that premiums will once again come a little closer to where they were five years ago, but no much. That’s what happens when you raise rates by massive amounts all at once, it takes governments years to deal with it, in the meantime you gouge customers, and then in five years time you lower prices a little bit to keep people from going berserk.

    If thats your idea of a liberal democracy thats fine, in fact the same arguments were made back in the thirties to keep energy from being nationalized. However, don’t be surprised when this issue doesn’t go away.

  9. Spinks says:

    All I know is my rates are lower than they were in ’02. Something worked. Although for full disclosure, I had to shop around and change insurance providers about three times.