CKNW Editorial
for October 2, 2001

The times are going to be rough on public servants and it’s all too easy for us who are not in the public sector to think, or even say, good riddance. We should reflect that these are our friends and neighbours who’ll be getting pink slips. We must also consider that while the government saves their salaries, they lose their income tax and must, in some cases, pay social benefits they wouldn’t otherwise have had to. But there will be massive cuts and for that much blame can be laid at the feet of the NDP who expanded the public service both times they’ve been in office.

The real question we must ask ourselves is if we really need, as opposed to want, that service and if we do need it, is it best provided by government rather than the private sector?

This will be an interesting question when applied to ICBC. Of course we need automobile insurance but can it be most effectively delivered by the public sector? That is not as easy a question as one might think. If everyone had the same coverage, was an equal risk and therefore all paid the same it would be easy. Almost without question the private sector would do it more efficiently. But that isn’t the case.

What ICBC does is insure every car in the province irrespective of the driving record of the driver. As a society we consider this important.

It’s useful, I think, to consider the system ICBC replaced. Then the insurers didn’t insure every car – they could and often did refuse to insure because of the driving record of the applicant. They often were high graders – in other words some took only the better risks and that group would usually cancel after one accident where the insured was at fault. What happened to the people no one would insure? They were handled by what was called the Assigned Risk Plan which was funded by all insurers in proportion to the business they wrote. The premiums were very high indeed.

What about people that didn’t get insured, an insurance policy not then being a requirement of getting a car license?

There was what was called the Travel Victims Indemnity Fund which acted as an insurance company and paid our claims to the maximum of the minimum limits imposed by law. Whatever the sins of the old system were, everyone was covered one way or another.

The principal benefit of the old system was that there was choice – not for everyone – but for the better driver. One hears complaints that in the old days companies didn’t pay claims but I was in the business in those days and most companies behaved responsibly and well. There were some that didn’t but they were a small minority. And some people weren’t satisfied with settlements but the same goes for ICBC.

The government will have a couple of motives for selling ICBC and allowing in competition.

First, it will gain the capital investments of ICBC – I don’t know what that amounts to but I should think they would be pretty substantial.

Second, it will get out of the insurance business and, from a philosophical point of view, that will be good news for government supporters. There won’t be any direct political payoff but insurance executives are usually free enterprisers.

The government will buy some considerable grief too, just as the old Social Credit government of W.A.C. Bennett did. Because even with private insurance the government licenses and to some degree administers the car insurance business they are by no means off the hook if it all goes back to the private sector. The political heat got so great on the government back in the 60s that it had to appoint a judge, Wooton by name, to hold a Royal Commission to assess the public’s grievances and make recommendations. The first No Fault Payment scheme came out of this report.

The screams we’re hearing from the left, as ICBC is being considered, is that premiums for the very young and the oldsters will skyrocket. That’s an interesting observation for what it says is that these groups are not paying their fair share now and that as a matter of ICBC, for which read government, policy the rest of the driving public must subsidize these two groups. And indeed here is where the system breaks down.

Suppose this was shipping insurance and the insurance companies insisted that the skippers of the ships they insured were old enough to have some maturity of years but not so old to have lost some of their edge. No one could complain. We would say, that’s what a sensible insurance company would do.

If the Shipping Company’s insurance company went to the president and said we won’t insure you if Captain Mair is the skipper, because of his bad record we would applaud the company’s business acumen, especially if we were shareholders. But car insurance has injected in it a political element. The government is afraid to take away the drivers’ licenses of bad drivers unless the record is truly appalling. And the government can’t stand the heat when young and old people say that they cannot drive a car because their risk factor is so high that no one will insure them at an affordable price.

There is another element in the mix. The private insurers, having been sent packing without compensation nearly 30 years ago, are not going to come back in in a big way unless they have some sort of guarantee that they’ll be around for awhile. They’ll be only too happy, of course, to high grade the market from their offices in Calgary and Toronto but they’re certainly not going to make any sizeable capital investments in a place where they’re but one election from being tossed our again.

The government may simply be planning to make ICBC a little leaner and meaner. But though I’ve never been a fan of ICBC, I hope they understand that to bring in competition without assessing all the consequences would be a very silly thing to do.