“Alberta Government Addresses Insurance Rates”

Provincial governments across Canada are being forced to address rising insurance rates.

Alberta Premier Ralph Klein’s provincial government has felt the heat from the electorate and announced a review of the insurance premium increases that have hit Albertans over the last two years. Let’s hope King Ralph doesn’t strike out on this one.  One can only wish that he takes this problem to independent experts, people with business experience as well as people with experience in the industry.  If he uses bureaucrats to try to solve this problem, we are doomed.

To be perfectly honest, the insurance industry should have been placed under a detailed review nationally many years ago. 

First let me qualify my expertise to present my opinion on this issue.  I was employed and self-employed as an independent insurance adjuster in Alberta for 12 years.

Let me give you an example of the exploitation of the public perpetrated by the insurance industry.  Under the Canadian Constitution’s Charter of Rights and Freedoms it is against the law to discriminate by gender.  The insurance industry has been discriminating against young men (16 to 25 years of age) for decades.  I have a twenty-two year old son and a twenty year old daughter who have both been driving in Alberta since they were sixteen.  We have experienced this discrimination first hand.  My son and I often wondered why this gender discrimination was never challenged in the courts but, as we both know, the obvious answer is the totally immoral, exorbitant court costs.  But that is another issue.

In Canadian provinces that don’t have government automobile insurance programs, when a sixteen year old male obtains his drivers licence, he automatically pays a minimum two to three times as much for insurance as a sixteen year old female driving the same vehicle. The variable in the cost ratio, of course, is the type of automobile that will be operated by the insured.  The more luxurious or powerful, the more the male pays. This is true when both applicants have the same experience, training, driving record etc..

So how did the insurance industry get away with this larceny?  They said their rates are set by their claims cost statistics and how much money they put out on settlements for the male (16 to 25 years of age) group.  That means that all members of this group, when they get their licence, are guilty by association.  This is in direct violation of common-law.  Other than dealing with Canadian Customs and Revenue Agency and the Firearms Act, Canadians are supposed to be innocent until proven guilty.  This male group is considered guilty without, individually, having done anything wrong.

The solution to the problem of what rates should be charged in a free enterprise system is simple.  When you sin as an insured driver (an accident that is your fault, driving infractions, driving without insurance, etc.) the cost of your insurance goes up and the cost of your driver’s licence goes through the roof.  This puts the onus of responsibility on the person who is the bad driver, breaking the rules and the laws.  It would be a new, novel idea in Canada; - the person who is responsible is held accountable.

And I don’t believe no-fault insurance is the answer.  When there is an accident, it is someone’s fault.  Sometimes there is a division of liability or fault, but nonetheless, someone did something wrong.  Injured people are entitled to reasonable compensation for pain and suffering.  But Premier Klein’s experts, and I use the term loosely, have to address the issue of settlements for injury claims.  There is no common sense in the amounts awarded by the court system.  The government has to limit settlements to put the insurance industry in a position to “balance their books”.  They are in business to make a profit and that is not a sin.

And somehow, we have to put some semblance of commonsense in the judges.  I don’t know how we do that but an example of their lack of common sense is the application of contributory negligence in certain situations.  It is a travesty.

And it might be a good time to replace the ban on all lawyers advertising in Canada.

The insurance industry, who raised premiums to cover major losses experienced on their investments in the stock market, is not the only bad guy in this skit.  We have fraudulent injury claims, injury lawyers, poor loss adjustment and cost control, fraudulent repair bills, repair labour rates, parts costs, settlement amounts, etc.  The list goes on and on.  But it is time for the government to step to the plate and try to put some sense in this out of control industry.  Let’s hope King Ralph doesn’t strike out again.