“The no-fault quagmire”

…the much-reduced involvement of judges in most cases means that judicial oversight is lacking, making it easier for fraud artists to rip-off the system. The costs of these rip-offs are then passed along in the form of higher premiums. And, as auto insurance has been compulsory since 1980, insurance companies have a vast and ever-expanding captive market.”

Jeff Goodall, “Fight Back”: Canada Free Press, September 29th, 2003.

I have never owned a car in my life, and I have never had a driver’s license. I have always lived in a city, and have always had easy access to public transportation. If I ever need to travel greater distances, I can usually pay someone to accommodate me, and on the one occasion that I tried out a mini-bike in a bush area, I was found a good hundred feet away from the machine and needed a couple of weeks in hospital and some plastic surgery. I stay away from things that go fast because I love high speed, and I can be very short-tempered with strangers. So, there would not be any apparent reason for me to take any interest in car insurance, except that it’s a hot political issue right now. And, anything that negatively impacts our economy, does a number on me also.

Enter Paul McKeever and his Freedom Party, of whom I wrote in “Time for a change” earlier this month. The following is largely taken from his party’s leaflet, “The right direction for auto insurance”. According to McKeever, our problems commenced in 1990 when the then-Liberal provincial government decided to opt for “no-fault” insurance, a totally different concept to tort-based insurance where the guilty party in an accident can be sued for damages. As he puts it, “No-fault insurance is an attempt to reduce insurance pay-outs by preventing injured people, in most cases, from suing the drivers who caused their injuries. In short, ‘no-fault insurance’ is actually ‘no-lawsuit insurance’.”

The consequences have been disastrous in many ways. As both parties involved in an accident must make a claim, even drivers involved in accidents through no fault of their own can find their premiums increasing. Additionally, the much-reduced involvement of judges in most cases means that judicial oversight is lacking, making it easier for fraud artists to rip-off the system. The costs of these rip-offs are then passed along in the form of higher premiums. And, as auto insurance has been compulsory since 1980, insurance companies have a vast and ever-expanding captive market.

The American experience with no-fault insurance has revealed that premiums rise faster in states with no-fault insurance, and no state has adopted a no-fault scheme since 1976. Between 1989 and 1995, premiums in no-fault states rose nearly 25% more than in tort-based states, and profits for no-fault insurance companies were almost half as much again as elsewhere.

Colorado repealed no-fault insurance on July 1st of this year, and after being subjected to compulsory no-fault insurance since 1995, Saskatchewan’s drivers have been allowed to opt-out of no-fault insurance since the beginning of this year. But in Ontario, the horrors continue. Ontario’s experience has been that benefits have been cut in half, and yet premiums continue to rise. Now, those who can no longer afford insurance and yet need a car in order to get to work, face unemployment, or even criminalization if caught driving without the coverage required by our current legislation.

Because of this government-inspired interference in the marketplace, premium rates are now an election issue; with party leaders trying to out-do each other in their promises to lower the burdens created by this out-of-control monstrosity. As the Freedom Party booklet says in its summary, “Ontario’s compulsory no-fault auto insurance scheme is failing both drivers and insurers. By repealing the highly bureaucratic and politicised compulsory no-fault scheme, and restoring Ontario’s tort-based system, a Freedom Party government will ensure that Ontario drivers can continue to drive and to get the insurance they want and can afford. The result will be an economically sound and just system with numerous competitive insurers, and an environment that does not allow political concerns to drive insurers into insolvency or out of the province.”

That makes sense even to this determined non-driver, even though I think that McKeever’s plan needs to be supplemented by protections against the overly generous pay-outs for damages ordered in the past by our courts, which played a substantial part in the move to no-fault in the first place.

We go to the polls on October 2nd, next Thursday. I, for one, am determined to send the PC’s a message, and I can’t think of a better way to do that than by voting for a party which has a platform compatible with my own beliefs and principles. Thank you, Paul McKeever, and the Freedom Party of Ontario.

Jeff Goodall worked for the Metro Treasury and City Finance Departments for 25 years, and served as a member of the CUPE Local 79 Executive Board for 14 of those years.

See original here.

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