LongHaul wrote:My first vehicle was insured with private insurance. For a young driver private insurance set rates very high based on “guilty until proven innocent”.
Well, actually charging a higher premium to an unproven driver is the basis of insurance. Every insurance policy, be it fire insurance on your house, life insurance, auto insurance is based on risk.
If you have a large cement water resivoir you will pay less for fire insurance than a dynamite factory located in a wooden building.
I think ICBC has addressed this pretty well. They basically charge new drivers "base rate" (call it what you want). It's basically a moderately high premium but not super high. As the new driver either accrues years of safe driving, or accrues claims he/she either pays more or pays less.
In the private world, where there is no government insurance, a new driver, who wants to own and drive a car has to buy insurance. All the insurance companies stand together and refuse a new driver coverage. The government then places these driver who can't buy insurance into a system where each driver is assigned to a private company and this company must sell the driver insurance. Depending on the jurisdiction, it has different names, some call it "Assigned Risk" it also has other names. But, being private they can charge whatever they want and provide limited coverage down to whatever the basic minimum coverage they are required to sell in the jurisdiction.
For fun call up any private company in Alberta and tell them you are 18 and you just bought a new Mustang and you want to insure it. Nobody will insure you at any price. If forced, under Assigned Risk, they will sell you basic liability coverage, nothing on the car. Try to borrow money for a new car that has no own damage coverage insurance coverage.
Ironically that part of the system works pretty well. What 18 year old needs a new Mustang. They need to pay their dues, drive an older, smaller car that is less likely to get them killed.
It would take several years of an accident free record to get the rate down. One could shop around but the rate was incredibly consistent between companies. It was like comparing gas prices at service stations. Based on this I would say there wasn't true competition between the private companies. The main difference was hearing by the grapevine some were much easier to deal with than others when a claim was made.
I think private insurance got so arrogant and expensive they blew it by ticking the general public off and paved the way for public insurance. I was okay with public insurance coming in and felt the private insurance companies could only blame themselves for getting the boot.
However my concern is ICBC for the past few years seems to be headed down the same road of arrogance that got private companies the boot. If there is an unspoken mandate to run ICBC like a private company and maximize revenue to the province with their power ICBC could become worse than the worst private company BC ever had.
Actually ICBC isn't even close to what private insurance is like. It isn't perfect and it has a long way to go, but private ?
How about, you are a new driver, you've had one minor collision a year previous. When you renewed the next year your rates obviously go up, but you've smartened up. One night while parked on the street your car is broken into. You place a comprehensive claim for the broken window, after the deductible, it cost the insurance company a few hundred dollars. Just before it's time to renew your insurance you get a form letter from your insurance company. Your insurance is cancelled, they don't want you as a customer. Now you are scrambling. Oh, and when you apply at the next private company, one of the questions will be "have you ever been denied coverage ?". Good luck
More people than ever would find they have to come up with the money to take ICBC to court to get their insurance contract honoured. If they can't ICBC just saved money on not having to pay a claim.
There are two reasons to sue an auto insurance company, the suits are completely different.
1) You are injured in a car accident and were not at fault. You feel that your injuries are such that you should get hundreds of thousands of dollars and the INSURANCE COMPANY FOR THE
OTHER DRIVER feels you should get tens of thousands of dollars. You issue a writ against THE OTHER DRIVER, who will pass it along to his insurance company. You go to trial, plead your case and the judge or the jury make their determination. Usually you can find a lawyer that will do this on a contingency basis (he'll take 30%, or so of what the settlement is) This type of suit has nothing to do with your own auto insurance policy. In BC because ICBC insures everybody, it has two hats. It is your insurance company and it's the insurance company for other guy. But make no mistake, when you sue, you are suing the other driver, not his insurance company. You are suing him for negligence. His insurance company, handles the suit, because that what "liability insurance" is.
2) You have a loss, you crash your car, or your car is stolen, or whatever. There is nobody else to pay for your damages other than your own damage coverage or yourself. Your insurance company refuses to pay. They give you a reason, you were drunk at the time, your license had been cancelled, you gave them a statement that you were going to the store and they find out you were coming home from the bar (false statement). For whatever reason they say they won't cover you and you think they should.
You sue them for breach of contract. You paid good money for coverage, your insurance company accepted your money and you entered a contract under which they agreed to cover you for this type of loss and now they won't. You could go as far as alledging "bad faith". That will get the attention of an insurance company. If proven you could be awared punitive damages on top of the amount of you are claiming they wouldn't pay for your car. A bad faith award is usually extemely high and is as rare, because insurance companies will avoid them. A bad faith award is basically regarded as a hammer over the heads of insurance companies to keeps them and the straight and narrow.
In the private world of insurance there have been auto insurance companies who have denied all claims of a particular type, lets say fire losses. Then they only pay the ones who sue.
The only check and balance that currently seems in place is the public. Once the general public gets upset enough with shoddy treatment by ICBC and our peerless politicians sense there are votes to be had they will pile on with reforms. If ICBC was put back on it's original mandate to provide quality insurance service at a reasonable price and the provincial government stopped milking it for revenue suspect ICBC would be very difficult for any private insurance company to compete with.
I totally agree. Imagine, ICBC now sells to most comers. It's rates for optional coverage is generally lower than private, except for the very low risk drivers, and had enough profit (that they are not supposed to make) to give the government almost a Billion dollars.
I agree with reasonable caps for injuries. Recall back in the 80's ridiculous claims for whip lash. Although some were legitimate it seemed many people must have had a genetic flaw that made them susceptible to whiplash even with the most gentle bumper touch. Some claimants in provinces that have caps complain the limits are too low. One option I suppose is to allow one to insure for a higher cap by paying an extra premium. This would give private insurance another optional item to compete on if they are interested.
Don't forget, bodily injury losses come from the other guy's insurance not your's. You don't pay the premium on the policy that is going to pay you for pain and suffering on your whiplash injury.
If the majority of these claims could be handled out of the court there would be a major savings in legal costs and time to process claims. Look for the Legal Profession with their strong lobby to fight this tooth and nail. If this went through a lot of lawyers would have to tighten their belts and lower their standard of living.
Just ask anyone in the insurance business to tell you what happend when lawyers were allowed to advertise. Before that, they couldn't. It's quite dramatic how the claims shot up.