CKNW Editorial
for June 12, 2001

One of the changes promised by Gordon Campbell is to ICBC although we’re not quite certain what is going to happen. What we should consider, in the name of historical accuracy, is the birth of ICBC in the first place. The legend – dare I say myth – from the left is that automobile insurance was a rip-off by the old line companies who never paid their claims and refused to insure young drivers. As with most myths, there is a grain of truth but not much more involved.

In those days there was a very large choice available to the consumer – unless he was an under 25 year old male for whose group the accident frequency and severity was so bad that few companies wanted to ensure them. Heaps of tears were shed by the NDP in the late 60s and early 70s for this "picked upon" group of young stalwarts and they vowed that they would put in place a public insurance company that would treat this group as little gentlemen, not the half pissed, show-offs many of them were as they made death on the highways the number one killer of young people.

Let me pause here to make an observation that is as politically incorrect today as it was then – the inability of young drivers to get insurance is not an insurance problem but a social one. Insurance companies were simply doing their business properly. They looked at this class of drivers and said that to insure them would require immense premiums none of them could afford … or the unreasonable cost of insuring them would have to be passed on to other policyholders. The result was what was called The Assigned Risk Plan where, mostly, young drivers were spread around all insurance companies so that even the "high graders", like Allstate Insurance, would have to take their pro-rated share. I said that it was a political problem because that’s what it was. The marketplace was saying, and saying very clearly, that some people simply should not be allowed to drive. The governments of the day were afraid to upset the group of drivers this entailed and rather than suspend or cancel the right to drive, blamed the problem on the nasty insurance companies.

It was said the private sector ripped off the public. This was mostly untrue. There was lots of competition and you could shop around. If you had to pay a very high rate that was because you had proved to be a bad risk. The true rip-off is with ICBC where you must, as a good driver, subsidize the rotten ones.

Now don’t get me wrong, Insurance is all about some people having accidents and some not … and the good drivers will, at the end of the day, have paid a lot of money for nothing but peace of mind. What we’re talking about here is who should pay for the abysmal driver? Under a monopoly scheme, all policyholders must whether they like it or not.

Besides, any fair comparison of rates will show that under ICBC good drivers pay much more than in other parts of Canada … if this weren’t so, why would the one competitor to ICBC for collision and comprehensive coverage be doing so well?

But it is said – under the bad old companies claims weren’t paid fairly and promptly and if you had an accident your insurance was cancelled. First things first – claims had to be paid or people went to court. The vast majority of property claims under the private system were paid promptly and fairly. If there was contention the parties, as now, could go to small claims court and the companies themselves maintained an arbitration system.

Were you cancelled after one accident? If you insured with Allstate you sure were but everyone knew that – after all, if you buy your insurance from a department store what can you expect?- and took the cheap rates and hoped they wouldn’t have a claim. And there was competition. If you were a decent driver an agent could get you insured again promptly.

Were there problems with the old companies? Of course there were but they were mostly political flames fanned by the NDP who made us believe that somehow a monopoly would be fairer and more efficient … which, of course, it hasn’t proved to be.

The trouble with inviting private insurers back in is that they’re once bitten, twice shy. Why would they make a big investment in a province that threw then out and, under another NDP government, would do it again?

Moreover, much as the independent agents fought ICBC in 1973 they love it now. It’s a no-brainer. Just fill out some papers, take the money, keep your share and Bob’s Your Uncle! Why would they want to go back to earning a living?

No … it’s hard to know what the new government will do but as we watch then make their minds up it’s well that we understand the history and know that if ICBC has to face a bit more competition it won’t be the end of the world as we have come to know it.