November 25, 2003
Kamloops Daily News


It's all because of the NDP.  That we have amongst the
lowest automobile insurance rates in Canada, that is.

The B.C. Liberals are quick to blame the former NDP
government for all their troubles. But they would never
admit that our public insurance corporation, ICBC, is saving
them from a lot of political heat.

Premier Campbell will grin and bear the distinction of being
the only right-wing government in Canada with a socialist
auto insurance.  He will even strengthen the public insurer
that was incorporated by NDP Premier Barrett in 1973.

While Campbell eagerly dismantles BC Hydro, he dare not
touch ICBC.  Not now.  Campbell has learned from political
blunders.  No, I don't mean his impaired driving conviction
in Hawaii.  I mean the one in New Brunswick.

The otherwise popular Premier Bernard Lord of New Brunswick
and his Conservative government were nearly defeated in the
last election over auto insurance.  Voters were mad as hell
with the price-gouging of private insurance and they were
prepared to toss out the government to show their anger.

And the Campbell can't even look for comfort in that
fortress of free enterprise, Alberta.  Their insurance rates
are the highest in Canada.   His friend, Alberta premier
Ralph Klein is frantically trying to control the political
damage by freezing insurance rates.  Klein shrewdly knows
when to control the marketplace.  The competitive free
enterprise system is the best way to keeps prices low - - except
when it doesn't.  Jim Rivait, with the Insurance Bureau of
Canada, was caught off guard by the freeze. "We certainly
don't like them, it's  interventionist. I think we should
just fix the problem."

Private insurance companies fix the problem by making
customers pay for their bad investments.  Ironically, 
insurance companies don't make money by selling insurance. 
In the last 25 years, 1987 was only year that selling
insurance was profitable, according to Paul Bobier in his
article for the Canadian Centre for Policy Alternatives
(September, 2003).

Private insurers make money by investing your money in the
hope that the investment returns will cover the true cost of
insurance and provide a profit for shareholders.

Before the collapse of the stock market, insurance companies
(and almost any fool) made big returns by investing money in
inflated stocks.  After the bubble burst, pickings are much
slimmer.  Now drivers are paying for bad investment returns.

To make matters worse court settlements for injuries to
people are rising, now exceeding the cost of repairs to
vehicles.  The costs for insurance companies are going up
and the returns from investments going down.  But those
costs have increased for both private and public insurers,
so why the difference in what drivers pay?

The difference is that public insurers are in the insurance
business, not the investment business.  Public insurers 
reduce driving risks, reduce accidents, and consequently
damage claims.   For example, ICBC identifies dangerous
intersections and roads, and works with local governments to
make them safer.  They work with police forces to reduce
speeding and violations that cause accidents.

The B.C. Liberals have wisely reversed earlier thinking. 
They eagerly canceled photo radar because it was unpopular
with speeders.  They put police out of a job.  Now the
Liberals have ordered an extra 100 cops to patrol highways
with more road checks and speed traps.

"ICBC is willing to fund enhanced enforcement, because
that's one of the best ways to make roads safer, to reduce
injuries and fatalities, reduce ultimately ICBC's claim
costs," says spokesperson Doug McClelland.

And who will pay for those extra police?   You and I will
through our auto insurance.  ICBC will pay cops to crack
down on speeders to prevent us from hurting ourselves, and
thus keep insurance rates down.  Not exactly right-wing
policy.

The only other provinces with public insurance plans are
Saskatchewan and Manitoba, where insurance increased by only
8 per cent.  In all other provinces with private insurance
increases averaged 58 per cent.

When he thinks he can get away with it, Premier Campbell
will revert to his old ways and privatize auto insurance. 
He will carve up ICBC the way he is slicing up BC Hydro.  We
will soon pay the same high electricity rates and the same
high auto insurance rates as Alberta. 

Too bad that Campbell doesn't learn from Alberta's mistakes.  
Public corporations are best served whole, not sliced up.

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