Private Insurance Is Off The Rails

Private Insurance, such as what we have in Alberta, has clearly lost its way. As a result of killing a brain dead law that punished accident victims to protect the financial interests of big insurance companies.

Well, today's announcement of a minimum 5% hike in automotive premiums across the board in Alberta tells us a great deal about how greed driven this industry really is:

During public hearings held in June, the Insurance Bureau of Canada asked the board to hike premiums by 37 per cent, which would have meant a jump of up to $200 a year for the average driver.

Insurance companies said the marketplace is unstable right now in the wake of a court ruling earlier this year when a judge struck down Alberta's $4,000 cap on non-pecuniary damages for some soft tissue injuries.

The market is "unstable"? What the heck does that mean? With over 3 million inhabitants, a good proportion of which drive, it's hard to imagine how there's an instability in the market in any way. There might be an uncertainty, even that strikes me a something of a crock in the first place, since Alberta is hardly the only jurisdiction in Canada with similar legal issues.

The fact that the industry asked for 37% hikes, is a sign of pure greed. Insurance companies have become more about skimming the margin on the investments they make with premiums instead of about the 'shared risk' model that was the original intent of the business model. These days, an accident tends to result in a jump in premiums which mysteriously is awfully close to the cost of borrowing the money to effect repairs directly - in essence the insurance companies are no longer in the managed risk game, but are in the money lending business.

When the Kleinosaurs decided not to regulate the insurance industry, but rather to regulate the victims of accidents instead, it signalled to the industry that Alberta's politicians were no longer going to represent the interests of Albertans, favoring instead the monetary interests of big money.

On Capping Insurance Payouts

I realize that lawsuits can, and do, get out of hand at times. However, legislated caps on what insurance companies have to pay out to injured parties in an accident doesn't cut it.

With the Stelmach government was trying to breathe life into the dead $4000 cap this past week, I thought it worthwhile to put the "cap" in perspective.

If you are like most Albertans, you spend several thousand a year just on insurance for yourself and your car(s). If one of the cars is damaged in an accident, even a minor bumper ding is going to run you over $1000 to repair these days, and you'll be over $4000 pretty quickly if any body damage is incurred. Eighteen years ago, I was involved in a minor accident (nobody was actually hurt) that cost over $8000 to repair my vehicle.

Now, think about that. We don't put caps on how much we'll pour into the vehicle itself. If it takes $10,000 to fix it, it can be arranged - at least as long as the "market value" of the vehicle is high enough. But, the Alberta government wants to cap what an individual can be paid for certain types of injury.

Soft tissue injuries tend to last a long time, and often correlate with the onset of long term conditions like tendonitis and arthritis. What value do we place on the lost work time that someone with these consequences? A mere $4000? That's less than we're willing to pay out to repair someone's car!

The insurance industry is all about protecting their profit margins in this matter. It's time for some real leadership from our politicians. I don't care if it's a "Public Insurer" a la ICBC or a regulatory environment that strictly controls the insurance companies operating in Alberta.