To the editor,
Re: Let’s have a referendum on auto insurance in B.C., Letters, Jan. 14.
Recent debate in these pages has got me thinking more deeply about auto insurance.
In most advanced economies, driving is a privilege and drivers are required to have the means to cover the cost of their errors – i.e. mandatory insurance. In the normal situation where the private sector provides insurance, companies manage their total risk by competing for the lowest risk customers by offering low premiums. Higher risk customers pay more and have less choice. The highest risk customers become uninsurable, effectively losing their driving privilege.
Our situation in B.C. is totally different because the government is the ‘insurer.’ It has no one to compete with. So why does it adjust premiums according to risk? We are effectively just socializing the cost of road accidents here. The valid reason to vary premiums would be to influence driver behaviour so as to reduce the overall cost and make roads safer. But if that were the strategy, then why do we take one big risk factor – driving experience – and make it more expensive for young drivers to accomplish? It would make much more sense to incentivize things people can control, like GPS speed data logs, or accident-free kilometres driven, or regular skills updates and retests. And to penalize for infractions of course.
I can only imagine that the government is dancing around public opinion and sense of fair play, making our cost-socialization scheme look like the risk-weighted private sector alternative, in order to keep it in the public sector, and in order to avoid having to confront us with the fact that driving is indeed a privilege. This is a fudge. We should either open auto insurance to the private sector and let the market set the rates, or we should set rates to incentivize behaviours that deliver better collective outcomes on the roads.
Andy Reynolds, Nanaimo
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