asi an

Is it true

what they say

'‘unprofitability'

about

Pa

How a government-sponsored auto-in

ie 1965 most insurance compa-

nies raised their automobile

fates twice in Ontario. This
year the rates were jacked up
again. In B.C. a Royal Commis-
Sion is conducing an inquiry
into automobile insurance rates.
In Alberta price-fixing by insur-
ance companies is being investi-
Bated by.a government com-
SULAES 2 Se St Ss Se coe ae

erp Voe

Ih Saskatchewan, Premie

Thatcher is apparently trying to .

- Show that public insurance has

to act like the private compa-
nies, for rates under the compul-
Sory government scheme were
Mcreased 11 percent this year.

: All of which should indicate it
is high ‘time public pressure
forced a radical change in the
Car Insurance racket,

The insurance companies have
been Claiming “losses” for years
Now on automobile coverage,
yet they still continue to write
automobile policies, Everyone
knows they are not in business
to provide a public service, but

~

to make profits. So. it stands to.

Teason that if they were losing
Money on this facet of the busi-
ness, they would soon get out.

What is obvious is that the
Tates are Continually being in-
Creased so as to maintain the
Profit margin as more and more

Cars get on the roads and acci-
€nts increase.

Besides the general rate in-
creases, those drivers who have
accident records (and in time

who won't?) are forced into a

Provincial “assigned risk” plans
at really fantastic cost. Under
these Plans, the risks are auto-
matically spread among all auto
Msurers in proportion to their

Share in the total auto insurance
market,

In Teality, however, this ‘“‘as-
Signed risk” idea is simply. re-
Cognition of the value of spread-

ing the risk which would be best
accomplished with an all-em-'

Tacing government plan.

_Another way in which the in-
dividual car owner is being

gouged is the system whereby
certain groups are given so-
called “fleet” rates. Competition
is keen in the insurance field

and some buyers are in a posi-’

tion to bargain, therefore “fleets”
are insured at substantially cut
rates with the burden of mak-
ing up the discounts resting

squarely on the shoulders of the °

_individual buyer.

In the press’ recently, there ©

has been some controversy about
“fleet” rates and in particular
“synthetic fleet” rates. The Fin-
ancial Post (June 4 and June 25)
mentioned the possibility of a
crack-down on insurance firms
which gave discounts to “syn-

~ thetic fleets.”

These are groups of people
who may work for a certain

company, or are members of a :

given association, whereas a

“legitimate fleet” consists of a
group of travelling sales staff of
a company or a group of taxi
drivers where there is really one

owner of the fleet of cars, Again, .
these legitimate fleet or quan-.

tity discounts illustrate the
superior value of government
insurance which would central-
ize the maximum quantity of
business with the maximum risk

. Spreading.

Just how are the automobile
inSurance companies doing? The

following is taken from the Fin-:

ancial Post of April 16, 1966.

Earned premiums increased
from 1964 to 1965 from $425.9
million to $504.6 million. Claims
and expenses went up another
$24.2 million from $335.1 mil-
lion. This gives a loss ratio drop
of 71 percent in 1965 as com-

‘pared to 79 percent -in 1964..

Last year was obviously bet-
ter than the year before. But the

- gimmick in these figures is that

they do not include investment
income.

With interest rates high, in-
surance. companies have been

Are you under 25,
unmarried, driving
a 1961 eight-cylin-
der car, living in
Cornwall? The
cost of your auto-
mobile
is a whopping $407.
If you live in Fort

William, which has
the lowest rates

in Ontario, it still
costs you $241.

insurance

_ making 6 percent to 7 percent on

their total investments in recent
years. So even if they did lose
money in under-writing, the in-
vestment income could easily
provide a handsome overall pro-

> fit.

When one considers: that there
are over 300 companies in the
automobile. insurance business

in Canada, and starts to add up

the various expenses that come
out of the premium dollar, such

as the multiplicity of adminis-

trative salaries, agents’ commis-
sions, advertising and other ex-
penses, one logically comes to
the conclusion that it could all
be done by one government

. agency, at much less cost to the
_ individual. .

Other countries have compul-
sory state automobile insurance,
and even in our own country,
the province of Saskatchewan
has had such a plan since 1946.

Saskatchewan’s Automobile
Accident Insurance Act is ad-
ministered by the Saskatchewan
Government Insurance Office
and is an automatic accident
compensation scheme designed

to provide a reasonable mini-_

mum of compensation for losses
arising from motor vehicle acci-
dents regardless of fault.

The plan works on the basis
that each motorist takes out the

‘minimum amount of insurance,
the premium ‘of which is part of -

the licensing fee, and then can
obtain additional coverage either
from the government plan or
from private insurance com-
panies,

The Saskatchewan Common-
wealth of July 7, 1965 pointed
out the differences between
Saskatchewan and Ontario. The
insurance plan examined is one
in which in Saskatchewan there
is medical and surgical personal
accident insurance of $2,000 and
the same in Ontario. In addition
though, in Saskatchewan there
is a $4,000 dismemberment and
bodily disabilities section, week-
ly indemnity up to $2,600 and

death benefits up to $10,000

September 2, 1966—PACIFIC TRIBUNE—Page 5

surance scheme could save you money

which ‘are not covered in other
provinces. Bodify injury and
property damage liability is
$235,000 in Saskatchewan as
compared to $200,000; collision
$50 deductible in Saskatchewan
and the same in Ontario; com-
prehensive, non deductible in
Saskatchewan and $25 deduct-
ible: in Ontario; plate glass, $50
deductive in Saskatchewan as.
compared ‘to $25. d

Now what does it cost a car
owner. Take a man under 25
years of age, married who has
had no accidents in the past
three years. He wants to insure
his 1961 Chevrolet Sedan, 8 cyl-

. inder.

. In the four main. cities of
Saskatchewan he would pay
$117 and in the remainder of the
province, $102.

Now in Ontario the lowest
rate would be in Fort William
of $241. The cost ranges upward
with $344 in Toronto, $356. in

_ Ottawa, up to the high of $407

in Cornwall.

Perhaps you think this is an
exception so look at another ex-
ample. This driver is over 25
and has had no accidents in the
past 3 years. He drives the same
model car.

In the four large Saskatche-
wan centers he would pay $74,
and in the remainder of the

province $69,

Now he comes to Ontario. and
the low, Fort William is $101,
the high, Cornwall, $166.

As it is now, the federal in-
surance act does not touch the

- question of rates. The Ontario

insurance act has some clauses
giving regulatory power over
unreasonable rates, but these
clauses have never been pro-
claimed and put into effect.

The only way to end the goug-
ing of motorists by private in-
surance companies is to get the
Ontario government to introduce
a compulsory government spon-
sored automobile insurance plan
providing all drivers with ade-
quate coverage at a reasonable
cost. —U.E. Research Bulletin. -