[gweed123]

In 2011, Ontario's auto insurance industry made $3.5 billion in profit (not revenue, profit). This is $3.5 billion of our money that is going to line the pockets of insurance companies, with the public seeing no benefit from it.

A possible tool for revenue generation would be to create a public auto insurance option, with premiums 10% lower than the current market rate.

If this option gets 20% marketshare, that would mean $630 million available for transit and road infrastructure expansion. 40% marketshare would mean $1.26 billion. This could represent a substantial portion of the yearly funding requirements in order to get the Big Move off the drawing board.

Imagine paying less than you are now, for a service that you're already paying for, and having that money go back into building new infrastructure that you and others can use. It's an infrastructure funding solution that doesn't rely on raising existing taxes or user fees, or creating new taxes or user fees. It's money people are already paying.

Just some food for thought.

 

[JayBeeGooner]

B.C., Manitoba, Saskatchewan, and Quebec offer public insurance, and it's reportedly lower than private insurance. So you get cheaper insurance and money for infrastructure. Win all around.

 

[gweed123]

B.C., Manitoba, Saskatchewan, and Quebec offer public insurance, and it's reportedly lower than private insurance. So you get cheaper insurance and money for infrastructure. Win all around.

Definitely. I think it's a good alternative for revenue generation. It also gets the government out of the paradigm of "we either need to raise taxes, raise user fees, or cut services". There are other alternatives for revenue generation.

 

[adeel]

I believe you raised this idea bfore...seems to be a no go due to the insurance lobby lining the pockets of fundraising politicians....

But I agree with you, seems to make a ton of sense in all aspects.

 

[TOareaFan]

In 2011, Ontario's auto insurance industry made $3.5 billion in profit (not revenue, profit). This is $3.5 billion of our money that is going to line the pockets of insurance companies, with the public seeing no benefit from it.

A possible tool for revenue generation would be to create a public auto insurance option, with premiums 10% lower than the current market rate.

If this option gets 20% marketshare, that would mean $630 million available for transit and road infrastructure expansion. 40% marketshare would mean $1.26 billion. This could represent a substantial portion of the yearly funding requirements in order to get the Big Move off the drawing board.

Imagine paying less than you are now, for a service that you're already paying for, and having that money go back into building new infrastructure that you and others can use. It's an infrastructure funding solution that doesn't rely on raising existing taxes or user fees, or creating new taxes or user fees. It's money people are already paying.

Just some food for thought.

few questions on your idea:

1. Why would it be 20% market share? From the little I know about the auto insurance industry.....once you set up a public "option" with preimiums discounted by 10% (or any amount) relative to the private insurers, the result would be the private insurers leaving the market place and the government would become the insurer of choice and would default to 100%

2. Anyone with any knowledge of how public auto insurance works in Manitoba? Are premiums lower? Is the program profitable for the government/public purse? Do private and public insurance programs work side by side?

3. Is the $3.5 Billion profit made in 2011 considered "normal" or did they have a good year where claims were low and premiums were high? Doe the auto insurers make money every year or are there years where they incurr losses?

4. If there was only going to be 1 insurer (depends on the answers to #1 and #2) how many jobs are lost from the exiting insurance companies and is the revenue/profit (depends on the answer to #3) enough to, both, offset the losses in government taxation caused by the job losses and invest in transit?

 

[gweed123]

I believe you raised this idea bfore...seems to be a no go due to the insurance lobby lining the pockets of fundraising politicians....

But I agree with you, seems to make a ton of sense in all aspects.

I posted it at a time where there was a lot of stuff going on in the thread, and it kind of got buried, haha. Given the big announcement today, and the inevitable talk of funding again, it seemed like a good time to bring it up.

few questions on your idea:

1. Why would it be 20% market share? From the little I know about the auto insurance industry.....once you set up a public "option" with preimiums discounted by 10% (or any amount) relative to the private insurers, the result would be the private insurers leaving the market place and the government would become the insurer of choice and would default to 100%

Because a lot of people bundle their home, auto, and life insurance with the same company, and thus get a discount on all of them. Also, a lot of people like the insurer they're with, and would be unlikely to change.

Insurers could either leave the marketplace, or simply drop their rates by a bit in order to stay competitive. Even if they do drop rates, they would still be making obscene profits.

2. Anyone with any knowledge of how public auto insurance works in Manitoba? Are premiums lower? Is the program profitable for the government/public purse? Do private and public insurance programs work side by side?

Not too sure, but I'll look into it.

3. Is the $3.5 Billion profit made in 2011 considered "normal" or did they have a good year where claims were low and premiums were high? Doe the auto insurers make money every year or are there years where they incurr losses?

It seems to be part of an increasing trend, pretty much since the current system was adopted in the early 90s (I believe it was 1991). Especially since the mid-2000s, the profit margin has been increasing at a very healthy rate.

4. If there was only going to be 1 insurer (depends on the answers to #1 and #2) how many jobs are lost from the exiting insurance companies and is the revenue/profit (depends on the answer to #3) enough to, both, offset the losses in government taxation caused by the job losses and invest in transit?

I don't think the insurers would leave the market. With Obamacare for example, I doubt there will be any decent sized insurance companies going out of business as a direct result of that law. I would imagine it would be the same with this law in Ontario. It's not like it's creating a monopoly, it's just creating a government-owned and run product to put in the marketplace.

 

[TOareaFan]

Insurers could either leave the marketplace, or simply drop their rates by a bit in order to stay competitive. Even if they do drop rates, they would still be making obscene profits.

So if they dropped their rates....does that not eat into the provinces' ability to get to that 20% market share? Does the province then drop their rates? and so on. If that cycle happened does it not lead to the insurers leaving anyway? If their profit margins drop to a level in Ontario that is below other jurisdictions why would they stay?

Are the profits obscene? $3.5 billion is a big number....but it is relative to the size of the business....is 12% an obscene return (see below).

It seems to be part of an increasing trend, pretty much since the current system was adopted in the early 90s (I believe it was 1991). Especially since the mid-2000s, the profit margin has been increasing at a very healthy rate.

I thought current legislation in Ontario limited them to a 12% return on equity and that they had to apply for any increases in premiums and show that all they were doing with increases was maintaining that?

 

[waterloowarrior]

Basically in those provinces you get the basic insurance through the public option and you can top up coverage with either the government or a private company. Quebec is a bit different, government covers injury/death and private sector covers property damage.

I believe the Charter applies to the public companies and they can't discriminate for age/gender etc, unlike private insurance companies which are typically exempted from human rights codes for these grounds.

 

[CDL.TO]

I'm renaming this thread as what we currently have is closer to Obamacare than what is being discussed above.

 

[gweed123]

Basically in those provinces you get the basic insurance through the public option and you can top up coverage with either the government or a private company. Quebec is a bit different, government covers injury/death and private sector covers property damage.

I believe the Charter applies to the public companies and they can't discriminate for age/gender etc, unlike private insurance companies which are typically exempted from human rights codes for these grounds.

That definitely makes sense. That way the private insurers still have a roll to play, in providing supplemental insurance. Yes, they won't like the change, but it needs to be done in cash-strapped times when we have a huge infrastructure gap.

I'm renaming this thread as what we currently have is closer to Obamacare than what is being discussed above.

Not a problem!

 

[mpd618]

Public car insurance in Ontario would make it possible for smaller car-sharing organizations to get coverage for a wider range of drivers. Right now that's pretty tough here, but easy in BC where there's public insurance and car-sharing is something that the province actually has an interest in supporting.