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IS THE INSURANCE INDUSTRY BECOMING A GOVERNMENT SPONSORED CARTEL?
Dear Ms. Cunningham,
First let me tell you I am an ordinary citizen. I belong to no special interest group and I will be writing you as a consumer. Though I will give personal examples of my experiences, I hope to show the practices of the auto insurance companies are not unique to me. Indeed, they are wide spread and occurring everyday to many citizens of Ontario. Also, I am not highly educated and do not possess any particular writing skills. So, I hope not to bore you but, most important I hope to make my thoughts clear. Lastly I have a problem I would ask you look into which I will detail in the body of the text, then close by referring to this incident.
"I was told I would have to pay these huge premiums simply because I had no insurance for a year.... my previous driving record was a six star (excellent driving record), no claims, no tickets, ever, twenty years plus of driving experience"
I have been observing the auto insurance business in Ontario since 1991. What drew my attention to this matter was, after having not driven for one year as a result of a divorce, I sold my car and cancelled the insurance. When I began to get my feet back on the ground I bought a new car and was stunned when I was getting quotes of $1700 to $2300 per year. I must tell you, my previous driving record was a six star (excellent driving record), no claims, no tickets, ever, twenty years plus of driving experience. I was told I would have to pay these huge premiums simply because I had no insurance for a year. My crime here was simply to sell my car, because I could not afford the payments, therefore cancelled my insurance. At that time the broker did not inform me I could have put my name on a friend's insurance policy in order to keep the insurance current. Although this also was not a good option for me, as I really could not afford any extra expenses at this time. Besides, I would have been paying for something I really did not want or need. All just to please the insurance companies. This is clearly a windfall profit situation for the insurance companies. I must have insurance by law, thus I must pay these ransom premiums. This is clearly not fair to the consumer. Can you imagine any other industry trying this, phone, gas, or hydro? It seems to me that in the auto insurance companies point of view was, "I must have done something wrong to have not had insurance". You will notice a "guilty until proven innocent" policy throughout many of the examples ahead.
" I ended up having to take the matter to small claims court.
Well my luck ran out, in 1996 when I had a leased car that was stolen. When recovered it was a total loss. The insurance company gave me a fair amount for the car, but withheld the taxes I had paid over the years, some $2500, or 15% of the value. The insurance company told me they would not give me the taxes because I was not the owner of the car, the leasing company was, and the leasing company was not asking for the taxes. I ended up having to take the matter to small claims court. I managed to convince a Judge I had the taxes coming to me, and was awarded these taxes. Fougere vs. Axa Insurance 1997.
I managed to convince a Judge I had the taxes coming to me, and was awarded these taxes.
Fougere vs. Axa Insurance 1997. "
" What if you went to the grocery store, paid for groceries, then the store tried to take back 15% of your food?"
This is a very good example of how the auto insurance industry is trying to take advantage of the average person. First the insurance company tried to claim I was not the owner, sure I am. I have all the responsibilities for the car as a regular purchaser would have. I am not a business, and I would have suffered this loss myself. I have to pay all the bills for driving this car the same as any consumer. I am as responsible and have all the liabilities of an owner. And perhaps just as important as ownership, I was paying the same premium whether I own or lease. There is no 15% cut in the rates because I lease. To me this is another example of the tactics that all auto insurance companies use to control their losses and profits. If they can "trim" 10% or 15% off all their claims, and collect the full premiums, this is quite a profit for them. Most consumers won't dispute these sums. What if you went to the grocery store, paid for groceries, then the store tried to take back 15% of your food? Also, the insurance companies force the consumer to settle these types of disputes in court, betting that most people won't go that far, either because of fear, or they simply don't have the time. This is abuse of the court system, using the courts to conduct their business. This ordeal caused me a great deal of stress, worry, and additional expense. Why should I have to be pushed into court to get what is clearly mine to begin with? None the less, of the thousands of claims made each year, this is a great way for them to increase their profits by simply cutting a percentage off their payouts. Then threatening to go to court, or put the consumer in that same position. I am sure this is a widespread practice by the insurance companies in Ontario.
" the insurance companies are in control"
Please keep in mind, I have to have auto insurance. I am just an average consumer. I don't have the time or desire to become an expert in the field. I would have no way of knowing before the purchase of a given policy if my insurance company would pay or not on a particular incident. Every policy I have purchased has not been delivered to me until well after I have committed to the policy, ( until paid for, or months later). Now I find myself in a legal contract. Perhaps thousands of Ontario citizens are denied claims, or portions of a claim, because the insurance industry is so complicated they don't know what is in the policy, or what their rights are. When insurance is mandatory, the consumer should be put on an even playing field. As things stand now, the insurance companies are in control. I am of the opinion that if the government is going to regulate this industry, it would do so best by making the system simple. If a person has a claim, the insurance company must correct the situation as it was before the claim. Currently there are too many loop holes, and if's, and then's, for the insurance companies to take advantage of.
" I have already contacted the companies Ombudsman, and they refuse to be reasonable in this matter."
The most recent problem I had with an auto insurance company began in May of 1998. This is the incident I am asking for your help. I have already contacted the companies Ombudsman, and they refuse to be reasonable in this matter. My wife's daughter had an accident in her mothers car. The daughter was deemed at fault by the insurance company even though there was a witness making a statement to the police that it was not the daughter's fault. The current system allows for the insurance companies to decide fault based on their criteria, you can bet the insurance company will rule in a manner which is best for them. My guess is, put the blame on the party that appears to be at fault as soon as possible. Time is money, they don't want to spend time and money investigating. The insurance company wasn't even there to see what happened. Perhaps statistically it can be shown she was at fault, but this does not properly address these times when someone is indeed not at fault.
"The current system allows for the insurance companies to decide fault based on their criteria"
" The insurance company refused to investigate"
The insurance company refused to investigate the witness, and the police did not write anyone a ticket, or charge either party. The insurance company just charged who they felt was at fault through some statistic system. The system clearly does not answer the problem for the few that are unfairly charged higher premiums. This becomes more meaningful when the difference in annual premiums can be doubled between someone who has no accidents and someone who has one. These amounts could be $500 or even more per year for six years. That is quite a penalty to have to pay. This system is an incentive for the insurance companies to continue this practice. Again, this practice allows the insurance companies a considerable advantage over the consumers in this market. Over the next few months, the daughter bought a car from her mother, had her own insurance, and indeed her own residence. The insurance company did not charge my wife with the accident, she still remains a six star driver.
"The insurance company just charged who they felt was at fault "
"Getting new insurance for my wife means providing insurance information about my daughter"
So, as I shop for auto insurance every year because the premiums keep going up, I found a new company for my wife's car. When asked for her driving record we felt free to say my wife had no accidents or tickets. After settling on a premium we bought the insurance. A while later we received a call from our broker asking about this accident. We explained what happened and a few days later were asked to produce a letter from our previous insurance company showing my wife was not charged for the accident. After sometime, the previous auto insurance company provided us with this letter. This letter stated clearly my wife was not charged in this matter, and indeed, was still a six star driver. After a couple of more phone calls, our new auto insurance company wants us now to provide them with a letter from the daughter's new auto insurance company stating that the daughter is being charged for this accident.
" What possible benefit would this information be to the insurance company? Except to help protect the cartel this industry has become."
We find this request very intrusive! We have no authority to demand a letter from the daughter's auto insurance company, nor should the new auto insurance company. It is none of our business what she pays for her insurance. Our insurance companies' demand is groundless. We are not insuring the daughter. What the daughter pays for her rates has no bearing on my wife's driving record. The insurance company has all the information it needs to determine my wife's rates. Yet I am told the insurance company has the right to ask for this information. In my view this request violates our privacy. Where did I lose my right to privacy? Why do I have to give up my autonomy to some company I don't even know. Here's that guilty until proven innocent thing again. We are told the insurance company will raise my wife's rates almost double if we do not provide this information. The insurance company will simply send out a bill for some $500 in additional premiums. Now they are in the position of collecting double the rates on a six star driver. If we refuse to pay, the charges go onto our credit. Who gave these companies the right to ruin our credit if we disagree with their demands? Not because we owe money for something of value we got, but because the insurance believes "something must be wrong". Also, like I said, whether the daughter is paying for an accident or not has nothing to do with my wife's driving record, or how much of a risk she is on the road. To us this is a form of harassment. If we don't like this issue, we must sue in court to have the charges removed. What possible benefit would this information be to the insurance company? Except to help protect the cartel this industry has become. It seems to me each insurance company involved in this matter would be able to raise the rates on each of the people involved in the same matter. Likely both parties involved in the accident, their rates would go up because the insurance companies are allowed to determine fault, and neither party would know how each other was affected thus no complaint would ever be filed. As an added bonus now the insurance company can "get" my wife's rates up. If you think this is go ing too far, stop and think why it isn't the other way. In these days of fast communication with computers, and the sharing of information, it becomes less of a jump of the imagination to see this is possible. What a windfall when an insurance company can charge double the rates on a very low risk driver. This is the issue I am asking for your help with. We have committed no crime, we don't have anything that is of any value to the insurance company that would warrant additional premiums.
Is The Insurance Industry a Cartel?
Perhaps now is the time to raise a few questions about whether the insurance industry is becoming a cartel. First let me start out by saying when one looks in the yellow pages there are plenty of insurance companies. This might suggest there is a lot of money in this industry to be able to support so many businesses. I don't believe the industry is crying about how tough it is out there to make a buck. I believe the industry is alive and healthy here in Ontario. Another point, when I looked through the government blue pages for the agency that is suppose to oversee this industry, I am directed to the Insurance Bureau of Canada (IBC). I, for many months believed this department was a branch of the Ontario government. It is not. This agency is paid by the insurance industry. Its phone number is listed in the government blue pages, and the people I spoke with did nothing to dispel this assumption. If you go to the IBC website, again under the Ontario government vale, one is given the impression they are in a government website. If you read what the website says it clearly points out all the rights of the insurance companies, and all the responsibilities of the consumer. In conversations with representatives of the IBC, I have always been told when I have a problem with auto insurance, the insurance company is correct, I am wrong. What appears to be happening here is, the insurance industry has positioned itself into the front-line to consumers. Thereby putting itself in a position to act as the government, but really promoting its own agenda. Not so you say? Well how about when one does have an accident and they go to the police reporting site. The consumer sees herself as going to an official government building, the Police Reporting site. Guess who's there, a representative from the insurance industry. You have to admit they are there to promote their own interests. How come there is no one there to represent the consumers' interests. Perhaps to let them know they don't have to take their car to a repair shop of the insurance companies choosing. Or, to make the consumer aware their car must be repaired correctly and in full, and that the insurance company must pay for those repairs. A lot of people don't know these facts. They have never been in an accident, they are scared, confused, don't know what to do after an accident, and simply rely on a "kind face" behind the counter to take care of them. This kind face however, is gathering information and giving information for its" best interests.
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