TK4
Well-known member
In a word 'no'. Insurance is a word with too many syllables for DoFo.
Will Ford tackle Insurance issues?
- Thread starter Mad Mike
- Start date
Type17
Well-known member
I doubt Ford would tackle this stuff if he wins. Car insurance rates are pretty reasonable and since most people in Ontario are cagers, this is a total non issue.
That said, some risks are forced on insurance companies because they are tail risks with low probability but devastating impact to the person buying insurance. Without regulation, you can opt out, but if it happens to you and you end up on your *** because you can't work and your employer benefits ran out, you better not be out there on kickstarter grovelling for cash or complaining that there isn't enough help out there and the state isn't taking care of you.
Maybe paying high insurance on motorcycles is enough to dissuade you from engaging in a high risk activity, passes the cost of the activity to you, and results in a fairer shouldering of the consequences of your activities than if you almost died and lived off of benefits your entire life. It may actually be cheaper at a societal level (once you account for changes in behaviour and incentives) to have this system, than to allow you to opt out of some coverage then have the state cover your bills from tax revenues.
In any case, i don't think insurance is as much of a racket as it seems. Small insurers pop up and go out of business pretty frequently, and margins really aren't that high on average. If we were cheap to insure and all low risk, then the market would take care of us appropriately.
J_F
Guest
accident benefits are a function of the regulatory framework
while the concept has had a few different names based on changes in government
it started with the Peterson Liberals when no fault became law in '90
premiums and benefits were low and the system worked fairly well for a few years
then Ontario took a stroll down Rae Lane and all hell broke loose
after a failed attempt at public insurance full blown accident benefits were legislated
this is when the rampant fraud started and premiums skyrocketed
Rae got tossed and Harris made some small improvements
then McGuinty was elected and the turds hit the fan again
I don't like having about 50% of my premium going towards something I don't want or need
I have disability insurance already, and pay through the nose for public health care
and paying it twice, once for the car and again for the bike is outright theft
as for transparency in underwriting, never gonna happen
actuarial science is top secret stuff, will never be publicly shared
Type17
Well-known member
Doug will give it to them straight out of his pocket if nothing else. Just tell them to close their eyes and open their mouths; their savings are incoming.
Mad Mike
Well-known member
There is no way to calculate margins the way Ontario's market is regulated. The comparison is price and the consumer level, that is the measure of efficiency in a market.
In Ontario, the gov't regulates insurance in cooperation with the insurance industry. They collaborate on pricing, product bundles, and work together to control who has access to the market. For gov't, it assures they collect a guaranteed revenue from transfer payments, for insurance companies it guarantees profits.
Issues:
It's completely controlled, but not transparent therefor difficult to challenge rate schemes and costs.
There is no incentive to fight fraud, the regulator allows these to be included as a cost before setting margins, these costs get fully passed along to consumers.
Insurers have a bigger hand in making rules than do consumers, they use this to create rules that keep revenues high and competition low.
Competition is restricted by limiting market access.
The most important question is why are costs so much higher than any other province, while crash rates are the lowest in the country?
Mad Mike
Well-known member
I'm with you for everything but the transparency part.
I don't care to see the formulas an actuary uses to compute risk, I want the raw data. You can get high level comparisons on the theft rates and repair cost of an accident/incedent by vehicle, but nothing that relates that to frequency of payout. They also hide all demographic data, so we don't really know if a 20 year old single female costs less to insure than her 35 year old married male counterpart.
Type17
Well-known member
It would be vague though and it is so on purpose; it's the secret sauce of insurance of the insurance business. Costs vary annually because they set pricing annually to recover losses and meet certain targets. Too low and you lose money or miss targets, too high and your clients go somewhere else.
There isn't a monopoly on insurance so I'm not sure why people think there isn't competitive tension... You don't need 1000s of big firms to have competitively priced insurance. Also i'm not an actuary, but losses and premiums become harder and harder to predict as your sample size gets lower so you'd get more volatility in your losses resulting in higher premiums...
It's kind of an interesting math problem.
Mad Mike
Well-known member
Life and home prices vary from company to company based on each insurer's risk appetite -- prices are fairly consistent from province to province. Auto is not like that, the best prices in Ontario are always higher than the rest of Canada, some drivers minimum price is 3x higher than other parts of the country.
The insurance industry also keeps regulations in place that are designed to protect profits, a good example of this is the lack of blanketability in auto. I can cover me my 2 sons, daughter, wife, dog, house, boat, cottage, skidoo, ATV, dirtbike, hang glider and jetski under a single $1m personal liability blanket. I can't cover 2 motorcycles.
Mad Mike
Well-known member
True, it's not by definition a monopoly, it's a cartel. Cartels are structurally different than monopolies, however they share the same goals of controlling revenues, costs and profits.
Type17
Well-known member
Do you actually know that for a fact or are you speculating? As far as I know, any sort of collusion is illegal in Canada.
I think a lot of you are missing the underlying problem with our insurance market here....fraud.
This has been well known issue for years. http://business.financialpost.com/o...ontarios-auto-insurance-system-is-a-car-wreck
When the fraud issue is dealt with and the costs associated with it disappear, assuming the government actually forces the insurance companies to adjust rates accordingly (not just swallow up the savings and wallow in the extra profit) we should see some results.
Can Ford accomplish that? Who knows.
This has been well known issue for years. http://business.financialpost.com/o...ontarios-auto-insurance-system-is-a-car-wreck
When the fraud issue is dealt with and the costs associated with it disappear, assuming the government actually forces the insurance companies to adjust rates accordingly (not just swallow up the savings and wallow in the extra profit) we should see some results.
Can Ford accomplish that? Who knows.
J_F
Guest
to complete the RCA
what component of mandatory insurance is most subject to fraud?
Mad Mike
Well-known member
The competition bureaus does not intervene in cartels that include a government regulator, the regulator has the authority to oversee price fixing and supply manipulation. In the case of auto insurance, the cartel leverages the regulator through a lobby and through cooperative agreements between govt and insurance to pay offsets back to the government.
With a good regulator this is a workable situation and could benefit all of us. I don't blame the insurance companies, they are businesses and their goals are business goals. The regulator, FCSO, should be working toward a taxpayer mandate. There are a couple of big things the regulator lets insurance away with that cost us all.
1) Cost of fraud. Insurance companies are allowed to bundle fraud costs into their base cost, which is the major component of their cost base. Imagine if all the banks got together and did the same, then asked the FCSO for approval to quadruple banking fees.
The FCSO should take a base line for insurance fraud costs across Canada, then ask the insurance companies to manage averages instead of passing that directly on to consumers. Gov't could also make changes that would make fraud easier to fight.
2) Restriction on supply. The insurance lobby collaborates to keep blanket products out of the Auto insurance market, a supply restriction made legal by the presence of a regulator. The regulator already forces a standard set of base and optional offerings, they could simply add blanket that would dramatically reduce costs for multi-vehicle owners.
