It may be time to revisit Bob Rae?s NDP proposal from 1990




By Alan Shanoff ,Toronto Sun

Saturday, September 01, 2012 06:35 PM EDT





Since Ontario has the highest car insurance premiums in Canada and the worst accident benefits coverage for the majority of accident victims, perhaps it’s time we revisited Bob Rae’s proposal to institute government-owned car insurance in Ontario .

After all, private insurers are forever crying poor over low returns, all the while complaining about fraudulent claims and annually increasing premiums for this mandatory product.

So why not give public auto insurance a try? It’s been done in British Columbia, Saskatchewan, Manitoba and Quebec .

We don’t hear the public clamouring for a return to the good old days of private insurance in those provinces.

Howard Pawley, former premier of Manitoba, made convincing arguments in favour of public auto insurance in his deputation to Ontario’s Standing Committee on Finance and Economic Affairs in July.

He conceded private ownership doesn’t always work better than public, but in the case of car insurance he argues the benefits of public ownership are clearly demonstrable.

Public insurance can prevent costly administrative duplication. Instead of dozens of insurance companies, each with its own bureaucracy, there’d be one public institution.

According to Pawley, “administrative costs of public plans avoids costly administrative duplication and are only one half as much as those incurred by private insurance companies.” There’d be one executive pool and one computer system, not dozens.

Surplus premiums, profits in private industry, would be returned to policyholders rather than paid to insurance company shareholders.

That’s not pie-in-the-sky thinking. According to Pawley, Manitoba’s rates decreased in 2011 — the third time in five years. That reduction was achieved via a dividend directly paid back to policyholders.

It almost sounds too good to be true. There must be a catch.

Is it that accident benefits are substantially lower in Manitoba?

Nope. There’s no cap on so-called minor injuries as there is in Ontario.

Standard medical/rehabilitation medical benefits have a cap of $100,000 for non-catastrophic cases in Manitoba, compared to Ontario’s $50,000 — unless an Ontarian purchases additional coverage, something that rarely occurs.

Further, there’s no limit for catastrophic injuries in Manitoba .

That’s not surprising as, according to Pawley, public plans return about 20% more to policyholders in terms of claims payments and accident benefits.

To add icing on the cake, insurance reserves in Manitoba are invested in public institutions.

According to Pawley, there’s currently $2.2 billion in reserves, invested in schools, hospitals and municipalities.

Interest on the reserves not invested in public institutions serves to reduce premiums.

There are other advantages to public insurance.

Provinces with public insurance have an extra incentive to take active steps to reduce accidents and encourage safe driving.

Manitoba has also done away with discrimination based on age or sex when it comes to setting premiums. Instead, bad drivers are assessed surcharges.

So with lower premiums, stable rates, surpluses going back to the public, and reserves being invested in public institutions, why aren’t we seriously examining the option of public insurance?

It’s not as if we’ll be driving insurance companies out of Ontario.

They’d still have commercial insurance as well as home and property insurance.

True, there’ll be some job losses, but four other provinces seem to have managed them.

True, Manitoba is much smaller than Ontario and has fewer drivers along with fewer accidents.

But all that means is that there’s even more scope for additional savings in Ontario.

If Manitoba has managed to achieve a reserve of $2.2 billion, imagine what sort of reserves we could achieve in Ontario and how that money could be put to use in our schools and hospitals.

Yes, we’d have to be careful the government doesn’t turn public auto insurance into a disaster a la Ornge, but are we so proud of the status quo that public car insurance would be a political minefield?

Remember, Rae won the 1990 provincial election campaigning on a promise of public car insurance. 

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