Whack A Policy: The Insurance Edition

So, Stelmach's government will appeal a ruling that struck down the arbitrary $4000 limit on "soft tissue injuries.

I've always had a problem with that limit. It looks too much like a case of 'treating the symptoms not the disease'.

Ostensibly, Ralph put it in place to ward off the ever increasing insurance premiums that Albertans face. Fair enough - there was a very real danger that insurance premiums were going to outstrip the ability of a lot of Albertans to pay them.

But, instead of appropriately regulating an industry that Albertans ARE OBLIGED to do business with (if you want to drive at any rate) by law, the Kleinosaurs put in place a policy that constrains (and arguably punishes) the victims of an accident.

There's something ass backwards about arbitrarily constraining the compensation available to someone because of the class of injury received.

The Insurance companies complain that the payouts for what they trivialize as "soft tissue injury" are getting out of hand. So, instead of an even handed set of policies that legitimately would have constrained lawsuits as well as imposing constraints on just what the insurance industry can do, our government created a policy that constrained the injured party following an automobile accident.

And Stelmach wants to keep this alive? Got it. So, as a consumer in Alberta, I remain obliged to purchase insurance from a privately held, profit-driven insurance company which can yank my rates around using pretty much whatever arbitrary rules they come up with to preserve their oh-so-vital bottom line?

(As a historical note, insurance is supposed to be a form of a cooperative, with the collective pool of policy assets mutually underwriting each other, on the probability that the one or two that have to pay out. The industry didn't become profit driven until relatively recently when someone had the bright idea to make money by investing premium dollars that weren't committed to payouts.)

Automobile insurance is one of those areas where the current "free market" environment is not in fact a free market at all. Why do I say this? Largely because we are obliged to engage the automotive insurance industry by the coercive force of law. If I want to drive, I am unequivocally obliged by law to carry insurance. Period. I cannot, for example, keep "adequate" funds stashed in a bank account as "equivalent to" insurance.

One cannot by legislative fiat create an industry without that same legislation binding that industry against exploitive practices. (and certainly, the automotive insurance game can be criticized as failing to be adequately competitive to reflect any sane notion of an "open market") Similarly, if, by legislative fiat, the government constrains the consumers of that industry's products, then there must be more than a "handshake" agreement in place that constrains the industry. (There can be little doubt that insurance premium changes are pretty arbitrary, and certainly to most consumers make little or no sense much of the time)

Stelmach's dogged insistence on repeating one of King Ralph's bigger policy errors does not make me optimistic about his sense of vision.