Ontario’s NDP tiptoes back into the auto insurance minefield

 By: Thomas Walkom National Affairs Columnist, Published on Thu Feb 07 2013

 Andrea Horwath, the leader of Ontario’s New Democratic Party, wants a 15 per cent cut in Ontario auto insurance rates. Here’s an idea for her:

Why not press for public auto insurance?

Ha, ha, ha. Ha, ha, ha. At one level of course, this is a joke. The Ontario NDP once promoted public auto insurance. Then, in 1990, when they came to power under Bob Rae, they balked and scrapped the idea.

Too bad. Auto insurance remains a fraught topic. The private insurers, through their Insurance Bureau of Canada insist that the public option — as practised in British Columbia, Saskatchewan, Manitoba and Quebec — is a dead end.

But voters in those provinces appear to think otherwise. At various times since 1945, when public auto insurance was first introduced to Canada, all four provinces have elected right-of-centre governments. Yet none has ever had the nerve to scrap the public scheme.

It is just too popular.

In Ontario, the private insurers fought hard against the public road.

First they blamed lawyers for high rates. They argued that if expensive lawsuits could be eliminated, rates would fall dramatically.

A Liberal government obliged and in 1990 introduced so-called no-fault insurance. No-fault limited the right to sue. In return, those injured in a car accident were guaranteed a certain amount of money toward rehabilitation treatment.

Yet Ontario auto insurance rates remained high. Whatever could the problem be?

This time, the private insurers blamed the rehabilitation clinics which, they insisted, were padding their bills.

So the provincial government, on the advice of the insurers, cracked down on the clinics.

Still, the rates were high. So the insurers blamed the system. They said drivers were required to pay for benefits they didn’t need.

Their answer was to create a cheaper level of no-fault insurance where accident victims would get significantly less. Drivers could then choose between this scaled-back level of benefits and a pricier version. The insurers called this giving consumers choice.

Again Ontario obliged.

Its rates are still the highest in the country. Even the right-of-centre Fraser Institute acknowledged that in its 2011 auto insurance rate report. It blames what it calls burdensome government regulations, as well as the fraudulent proclivities of Ontario drivers.

Excluding Ontario from the mix, the institute argues that motorists in provinces with public insurance actually pay more.

There are a few problems with this claim. First, it is not true. As the institute’s figures show, Quebec’s public auto insurance is the cheapest in Canada.

Second, the institute’s claim that motorists in the public-insurance jurisdictions of B.C., Saskatchewan and Manitoba pay more than drivers in Alberta and the Atlantic provinces is based on an intriguing set of assumptions that may or may not be legitimate.

A 2003 study by the Consumers Association of Canada took a much simpler approach. It compared insurance costs for drivers with the same profile (including age, accident record and vehicle type) in 40 cities across Canada.

It found that motorists in public-insurance provinces paid less.

It’s most telling comparison looked at rates paid by drivers in Lloydminster, which straddles the Saskatchewan-Alberta border.

Drivers on the Saskatchewan (public insurance) side paid consistently less for their car insurance than those on the Alberta (private insurance side.)

So here’s my unsolicited advice to Horwath: Don’t fiddle with a system run by and for the private insurers. They are a sly lot.

Instead, re-embrace the public option. Sure, it’s embarrassing to return to an idea that your own party once rejected. But memories are short. Maybe no one will notice.

Thomas Walkom’s column appears Wednesday, Thursday and Saturday