The Fraser Institute released a study yesterday comparing market performance of auto insurance in jurisdictions across North America and in Great Britain.
Data were collected on 15 variables describing the regulatory policy environments and outcomes in each jurisdiction using comparable measurement units. From these 15 variables, five indices were constructed that comparatively measure market quality and regulatory severity across international jurisdictions. Two indices measure market quality outcomes from the perspective of consumers regarding cost and choice; one index gauges market quality outcomes from the perspective of insurers regarding the business climate for auto insurance; a fourth index measures the regulatory severity of auto insurance policy in each market; and the fifth index measures overall market quality combining the scores for each jurisdiction across all 15 variables. This study also examines statistical correlations between variables that can be conceptually separated into distinctly dependent and independent categories.
PDF
(Note – some commentors are having problems getting through the spam filter. The word “insurance” is the problem. Try spelling it in abbreviation, and I suspect the problem will alleviate.)
Not true, Kate. A contribution to the Fraser Institute is tax deductible as a charitable donation. How obscene is that?
Any study, past, present or future will always come to the same conclusion: anything private is a good thing. Anything public is a bad thing. Any facts or figures will always conform to fit that freemarket fundamentalist “principle”
One of the great bits of rhetoric from the left has been that gov’t run auto liability ins’ance is cheaper than private sector cover. (i.e. ICBC and SGI are cheaper than AB’s “private” system)
Two things that put this tenet in the same category as “we’re from the government and we are here to help”:
1. In BC all of the other types of cover – collision/theft etc. are typically carved out and provided by private ins’ance companies because they are less expensive and are better plans.
2. For about two years now, as part of the reform of the AB system, provincial gov’t plans (ICBC and SGI) have been allowed to sell cover in AB. None of them have even attempted to enter the market, presumably because they can’t compete.
Further to this is the overlooked element of risk reserves. In the private systems each individual ins’er has to keep funds in reserve to pay claims. Naturally, this is built into the cost of the premium. In public systems these reserve requirements are not required as the province itself is the guarantor of claims. While in the face of it that would make it seem that the gov’t systems have an advantage. But they aren’t because they are hopelessly inefficient and what really is happening is that the taxpayers of those provinces are subsidizing those who own and operate cars.
(There is some force to the argument that liability insu’ers be required to have even higher reserve requirements in order to prevent some of the volatility in premiums as the industry cycles from the cutthroat market share phase to the cost control phase as anyone in AB can bear witness two years ago. Far too many mom and pop firms get into the market and drive the industry into a race to the bottom during the market share phase. But volatility aside, a car owner in AB over the past ten years has paid far less in total liability premiums than a similar owner in BC.)
Oh right! So now only the non-profits that the likes of maryjane support should be qualified as charitable for tax benefits!
Typical!
Okay Budd, you have the complete report available, along with all their sources of data. Show me how they have cooked their methods.
maryjane: You’re right that the FI contributions are tax-deductible. I have made many contributions and have deducted them. Where you are wrong is describing this as “obscence”. Union dues are tax-deductible, as you know, as well as contributions to environazi operations who want to create one big park and shut down the market system.
Iberia: Your comments about FI’s “fake independence” are juvenile. There’s no such as thing as a “independent” think tank in your sense of the term — all need financial support. They are independent, however, from government financial support, which is key; in other words, their finanial sources are voluntary! Of course they receive contributions from large corporations, as well as ordinary Joes like myself. But you know, Iberia, grownups don’t consider “large corporations” as intrinsically bad, and they are usually large for this reason: they have succeeded in satisfying consumer demands in the market place. Where you, and all lefties, go off the rails is your jejune pretence to ethical purity — your failure to also acknowledge that “progressive” left-wing think tanks receive funding from special interest groups with axes to grind, and all too often from government itself.
Government CANNOT deliver a good or service more cheaply (considering price and value) than the private sector. It is simply NOT possible. This is axiomatic, not open to debate. And government cannot run a ins’ce programme based on true ins’ce principles. Government CANNOT avoid politicizing the plan, not because it is peopled with bad men and women but for institutional reasons and the deleterious effect of monopoly operations.
Your training in economics must be very, very, very basic indeed. A province of a million people, probably some 700,000 drivers, is a large enough base to represent every type of driving experience.
You mention the “the taxpayer portion of covering ins. claims to keep costs low”. What are you refering to? You claim that “Ins. companies spread risk based on data that is impartial, market based …”. I find this claim very amusing given their transparently discriminatory pricing.
Posted by: Budd Campbell at October 12, 2006 04:36 PM
Bud,
Actuarial components involved with calculating risk for insur. schemes are structured to be openly discriminatory based on inductive logic.
Spreading risk across 7 million people is highly preferred to 700,000, especially if the population is diversified.
In response to your question on taxpayer portion of covering ins costs, if a crown loses money, there is an indirect net loss to the government. The way things are financially accounted within the crown sector allows for governments to “hide” this debt.
Cheers!
Leto
lberia:
1) I wasn’t necessarily referring to Budd the Dud’s claims on insurance in particular, but his assertions in general.
2) From your sources that you cite as proof (a 1999 press release): “The key conclusion of the Association’s review is that we haven’t seen strong evidence that a switch to a totally private auto insurance system would result in lower costs or better benefits for consumers in British Columbia.” Hardly proof of anything. And the NDP supportive missive from the University of Lethbridge is all assertion and no facts.
lberia, your “proof” is hardly a proof. Just more assertions and statistics taken out of context.
The Fraser Inst. says government is too big, taxes are too high. By swilling in the public trough, they increase the size of gov’t. and increase taxes for someone else. It is their egregious hypocrisy that is obscene.
And if it was axiomatic, Dhimmi, rates in Alberta would be below SK and there would be no argument.
It’s unfair to describe the the Fraser Institute as “swilling in the public trough”. I would never consider charitable tax credits on donations, even for far left operations, swilling in the public trough — only direct government grants and subsidies..
Sorry don’t know enough about Alberta/Sask, but I’m sure if we were to dig deep we would find anomalies in the accounting/reporting that might alter the comparisons.
I live in BC and under ICBC tyranny, so I’m a bit jaded on the subject. And I suspect it’s too much of a cash cow for any government, right, centre, or left to give up.
Don’t get me wrong. I generally despise the insurance business, private or public. On the other hand, they do get scammed an awful lot by people who don’t count it as stealing.
To me, it has always been axiomatic that keen competition in the market place brings the best consumer value. Think about long distance prices now compared to a couple decades ago.
maryjane, what you refuse to admit in your criticism of the Fraser institute’s studies which consistently conclude private is better than public, is the fact that they are generally correct. Private will always be better than public for the consumer, as long as there is competition in the market. Competition is what drives prices down. With publicly owned/operated businesses, there is no competition.
Actually, the state run insurance companies come in First, not Last.
They are the “BEST” for consumers, and citizens, and taxpayers. They are only the worst, for profiteers, gougers, and right-wing nut-bars.
BEST for consumers paying BELOW market rates, perhaps: like young people in BC who don’t pay correct actuarial rates (youth, less experience, more accidents) because it would “discrimate” against them. You know like a 57-year man paying higher life insurance rates than a 21-year old. It’s, whine, NO FAIR.
Again, a monopoly state-provider of a good or service CANNOT give better value (all in) to the consumer. The alleged benefit of the economies of scale achieved by a state monopoly are always more than compensated for by waste, inefficiency, and politicization.
Elementary economics.
maryjane:
Are you still on here spouting your socialist crap? Wow, you don’t stop do you?
I have a long tired tale of dealing with SGI. Essentially it boils down to waiting six months for SGI to settle my claim where someone smashed my car in the middle of the night. My SGI agent apologized to me on numerous occasions saying they were just ‘too busy’ and he tried to contact me – even though I never once saw his number on my callerID nor had one message from him.
So, in the end, when they did settle my claim, they charged me $700.00 for having my car get smashed by some punk who took off after he did it. That’s some insurance isn’t it? On top of that, they offered my over $1000 below market value for my car.
Bottom line, SGI is like every other thing in this province – it’s killing us. Population stats are down *again*, businesses are closing up and the majority of our so called ‘boom economy’ jobs are minimum wage.
The NDP has got to go – and fast.
maryjane:
Are you still on here spouting your socialist crap? Wow, you don’t stop do you?
I have a long tired tale of dealing with SGI. Essentially it boils down to waiting six months for SGI to settle my claim where someone smashed my car in the middle of the night. My SGI agent apologized to me on numerous occasions saying they were just ‘too busy’ and he tried to contact me – even though I never once saw his number on my callerID nor had one message from him.
So, in the end, when they did settle my claim, they charged me $700.00 for having my car get smashed by some punk who took off after he did it. That’s some insr isn’t it? On top of that, they offered my over $1000 below market value for my car.
Bottom line, SGI is like every other thing in this province – it’s killing us. Population stats are down *again*, businesses are closing up and the majority of our so called ‘boom economy’ jobs are minimum wage.
The NDP has got to go – and fast.
And Barney Rubble’s assertion is based upon what evidence?
Such unsubstantiated statements are similar to my 4 year old’s reponse to the question “Why did you do (insert most recent act of damage/assault) that?” being the old boilerplate “because”.
Cartoonish commentary, I guess.
So, does being able to buy a five thousand buck house make up for living in Saskatchewan, or what?
For every person that buys a five thousand dollar house there’s someone who sold a five thousand dollar house. Probably to move to Alberta, and away from that backward socialist province where mediocrity is welcomed.
The fact there are five thousand dollar houses is proof, in itself, that there is little demand.
The bright and ambitious move away, leaving the mediocre to live in, and administrate, a mediocre, backward, province. It’s a vicious circle.
Hey Kate I found the quotes of my ins. costs from Calgary and Vancouver, from a few years back. I do have a scanner but I dont know how to get it posted to your site. The lying loser scambull called me a liar and I have the proof , could you lead the way so I can get this info up on your site and PROVE this scumbag wrong.
This whole study is a sham of the Fraser Inst. WE have the lowest rates in North America. Don’t be fooled by this American bullshit.
Definitely b.c. has the lowest rates for some, but not most. Here’s the big IF.
If you are in what actuarial tables will describe as a ‘high risk’. Like:
1. a new driver under the age of 21 yrs. males are higher risks than females.
2. a new driver of any age or sex from a non-western country(where there is a language barrier, and roads are poor, the people are poor and generally can’t afford cars, and road rules are largely optional and are replaced by constantly blaring your horn before you seize the right of way).
3. a driver of any age or sex with a record of poor driving skills.
But enough of boring old statistics that have been accumulated for a few hundred years of record keeping, which of course is exactly what the actuarial tables are(hint:the tables can also reliably predict your age of demise, and other fun facts about individuals, and human activities).
Purely from the this is a fact file: a school friend went into the insurance industry(primarily auto). She can give me an address in the downtown core of toronto(population 2.5 million+/-, area 245 sq. miles+/-). With my current car and driving record, she can give me identical coverage for an annual saving of $330.00 from the b.c. government monopoly rate.
How does the government monopoly fail the customer?
1. monopoly delivery always evolves to satisfy the needs of the monopoly, and/or the government it serves.
2. with no competition monopoly delivery is lethargic, slow to react to change, and bureaucratic in nature.
3. monopoly delivery models lend themselves to policies and corporate activities that are not necessarily positive for the organization, or it’s clients(in this case the insured).
The b.c. insurance monopoly does some of the following things that are not in any way part of the insurance business mandate, or sound fiscal policy, which is simply a way of saying that the monopoly does not serve the best financial interests of the constituency(motorists).
On the balance sheet, the b.c. insurance monopoly lists as assets, or investments:
1. building roads at and around municipal intersections. an asset? not.
2. the socialist government has dumped off all of the attorney-general’s departmental responsibilities around driver licenseing, debt collection for driving infractions, and collecting/maintaining driver records. Insurance functions? not. This is tax-shifting to make the government look financially responsible. an asset? not.
3. social policy development(specifically in this case the surrey place mall development: a non-viable commercial entity with a record of failure rehabilitated by the insurance monopoly and then filled with governmental operations and agencies, in order to create an apparently positive illusion of profitability and economic sense. In fact merely a vote buying technique practised by government. This artificially props up an area, preventing private business from coming into the area to create a viable, tax-paying community asset). Artificially creating a seemingly viable economic opportunity by using funds from one part of the government to subsidize another is often called ‘robbing peter to pay paul’. There is only ONE taxpayer, so this ‘investment’ is illusory, not sound business practise, and also not in the interests of the insured. An asset? not.
So, if you are a new driver or a bad driver, or are simply so arrogant that you believe your rights have no responsibility attached, or supercede the rights of all others, a state-run insurance monopoly is just your ticket.
However, if you are a good driver, with a solid record of competence behind the wheel, your state-run insurance monopoly is stealing your money, to subsidize those in the preceding paragraph.
Why all the blather about investments? Because a private insuance company will cease to exist if not profitable. It must use sound investment strategies to enhance it’s bottom line, thereby allowing it to attract clients through competitive pricing and service.
Still like your monopoly insurance, now that some facts are clear? Didn’t think so!
Come by another time, we’ll talk about the soon-to-be-bankrupt medical care system. Another monopoly provider situation. But the medical fiasco is REALLY scary. It can, and in some cases already has, cost people their life and/or well-being!
Cheers!
ok4ua:
prove it.
k. smart :
Excellent post. Thanks.
I had a broken-down motorcycle picked up by a flat bed tow truck in BC a few years ago. During the tow, the MC fell over coming inches from fallling onto the road. For that damage claim, ICBC told me that obviously my $500 deductible would be waived as the driver was 100% responsible. Later, though, they assigned part of the blame to me for giving some suggestions to the tow-truck driver who, tho a rider himself and with 27 years experiece towing, was having some trouble deciding how to secure the MC. After dozens of phone calls back and forth, voice mails, even a “letter of concern” from the executive, I ended up paying the $500 deductible. I made the simple decision that the hassle was too costly to pursue.
Then it hit me: ICBC represented both sides to the dispute. Little old me, and a tow truck company with dozens of vehicles. No contest.
Sask has the overall lowest rates. There was a special on tv about insurance in Canada. Sask has the lowest rates. Lawsuits are breaking the bank in some states. The fraser institute lies through it’s teeth all the time. It accuses Canada of unfair advantages in insurance rates and then says we’re too high. They are pro big buisness and do so without any proof. They just say so. They are against Medicare,welfare,CWB,UI,Pensions and anything else that gives Canada an edge. So look it up in your Funk And Wagnal.
ok4ua:
You call a “special on TV” (possibly the government-run CBC) proof?
How about a link to it so we can all see how they arrived at the conclusion. And even assuming the premise of the “special” was that Sask rates are lower, that may be because they a have a no-fault system which means even if its the others guys fault you still share half of the blame.
As for your distaste for the FI, how about a constructive decontruction of their methodolgy in arriving at their rankings. I and they will readily admit their philosophical pro-market bias, but they take great pride and even greater care to use sound research to make their case. Show them and us where they are failing in that regard and I am confident that they would make amends.
Sask has the overall lowest rates. There was a special on tv about insur… in Canada. Sask has the lowest rates.
Did the “special” include the taxes used to subsidise SGI? As well as the cost to collect those taxes?
The Fraser “study” has been exposed for the lie that it is. Taxes don’t subsidize SGI. SGI and taxes subsidize farmers like ol hoss.
Ever notice, when the truth is stated the lefties just scream and say liar, when you ask them for proof they just scream a little higher.
Free, just read the Regina Leader Post’s business editor Bruce Johnstone’s take on the issue. Johnstone is no lefty and no advocate of public enterprise. In a study designed to conclude the opposite of what is true, it is positively Orwellian in the length it goes to twist fact.
Know the truth and the truth shall set you FREE.
MaryJane:
He’s the business editor for the REGINA LEADER POST. sort of like the business editor for Pravda or Torstar. You describe him as “no lefty”, which he would be in a world devoid of left hands, but in AB he would be a member of Kevin Taft’s fan club not Ralph Klein’s (and even RK is left of centre in AB).
If he supports SGI, then he IS an advocate of public enterprise.
If SGI is better than private, then why do we have any private healthcare at all? Surely a gov’t run system would be of equal quality and cheaper.
And why hasn’t SGI moved into AB now that it is allowed too? If it’s better, it should make very short work of the AB marketplace what with the hundreds of thousands of expat Sask residents who must surely be waiting with baited breath to get SGI as their carrier.
Private sector auto ins. is flawed (see my post further up) and operates in a gov’t mandated environment – you have to have coverage to operate your vehicle – thus it is a politcal minefield for both the carriers and the gov’t. And nothing agitiates citizens more than volatile insurance premiums. Gov’t monoploy systems may be less volatile, but they are nowhere near as cost efficient and responsive to customers than private profit-driven providers, which is why the gov’t gives gov’t run providers a monopoly – they couldn’t survive without it.
It does not follow that SGI is best because it has the lowest rates. This is the same line of thinking that leads to “we have the best health care in the world because it’s free”.
Great posts, MND and k.smart–I couldn’t agree more about government monopolies. My brother is a contract welder who has worked pipelining both in the Alberta oilpatch and for SaskEnergy. He says that more gets done before morning coffee break in the oilpatch than what SaskEnergy accomplishes in a day. Without pressure from competition, emphasis shifts to seeking ways to make a job easier rather than more efficient.
Auto – covergae in Sask should be the lowest in Canada. Did you ever notice how flat and open the province is?
No hidden intersections. No wild mountain roads. Sober, safety minded driving population.
BC. on the other hand with us Lucky drinking, pot smoking, drag racing, black ice oblivious drivers naturally put a strain on ICBC. = TG
Pro American and against Canada. Imagine that?