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IS THE INSURANCE INDUSTRY BECOMING A GOVERNMENT SPONSORED CARTEL?
"how many business organizations have special laws allowing them to intrude into private lives or demand private information from third parties that have nothing to do with their client?"
In my research on this topic I have tried to put together how the industry has evolved. In talking to other citizens on this matter I have come to the conclusion over the last few decades the consumer has become woefully under-represented while changes to the auto insurance act have evolved. Consumer groups are small in number, not well organised, don't have the money and often the time to stand up to the industry. On the other hand, the insurance industry has much more money, has lobbyists in government, and perhaps most important, has had time to slowly get its desires met through lobbying the government. I suspect that the Government uses the insurance industries figures to a large extent, when setting policy because the consumer is not able to get the same information about claims etc., that the insurance industry can get. Really, how many business organizations have special laws allowing them to intrude into private lives or demand private information from third parties that have nothing to do with their client? When the consumer is put in that position, the insurance company has the option of forcing the client to dispute the matter in court. They know most consumers will back down if court is the option.
"Take a look at how insurance is sold to the general public."
Take a look at how insurance is sold to the general public. When I shop for insurance I pick up the phone book and head for the yellowpages. I simply call and give a general idea of the coverage I want. I am led to believe all insurance policies are the same in Ontario, however if something goes wrong, one will soon see there are vast differences in policies and in the understanding of the policy. Anyway, I may call ten to fifteen brokers to get quotes, I'm trying to get the lowest premium. If I were expected to know what was in each of these policies, I would have to become an expert in the field. Yet this is the position we are put into as consumers. Also the companies will not send out a copy of the policy for us to read until we pay the premium in full. By that time, the consumer has entered into a legal contract. If one chooses to get out of that contract, they find they will be penalised monetarily for doing so. The insurance company is clearly in the favourable position again when dealing with the public. Remember, insurance is mandatory.
"Go ahead, call a couple of brokers"
I have found most insurance brokers will not offer much information to the consumer from one policy to another, or for that matter, how to even buy insurance, that is, what's best for the consumer. How they can save money, or who best to file a claim. Go ahead, call a couple of brokers for a quote, see how forth coming they are with information. Most consumers don't even know the questions to ask, and all of this is under the fact insurance in mandatory in Ontario. I don't mean to imply insurance should not be mandatory, in my opinion it should be mandatory. I am however, suggesting the consumer has to be empowered. Or, the insurance companies have to have clear limits restricting their powers. The consumer is forced to buy something yet they are not put on an even playing field.
Most consumers don't even know the questions to ask
"The consumer is clearly not being adequately protected."
Back in 1997 I called a broker for quotes on my 1997 Oldsmobile. He did give me a fair quote but I had to go down to his office to fill out the papers. In conversation while filling out these forms, he turned the computer screen around so I could see the quotes. At this time I noticed he indeed did not give me the lowest quote. There were two other companies with lower premiums. This was not an error on his part. There has to be some reason he did not give me the lowest quote, some incentive? I don't know why this would be to this day. On another occasion I had two different quotes from to different brokers, from the same insurance company. When I asked the IBC about this they asked for a copy of the written quote. I then explained, "quotes are given over the phone" I can't produce a written copy. These are not isolated incidences that randomly happen to me. They are everyday occurrences in the industry. These are the infringements that are not suppose to be taking place in this industry, but are. The consumer is clearly not being adequately protected. Once again in 1998, I called an insurance company and got a quote. I just couldn't find a low quote. My wife later called on my behalf and threatened to cancel her other insurances if they could not do better. They did, they dropped my rates by almost $200.00 for the same coverage. Now what does the fact of whether or not I have home owners insurance have to do with my driving record? That point becomes heightened when one talks about $200 or more in the difference of annual premiums. If need be I can furnish names of the companies, and or, people that I have dealt with over the years.
"We have been told if the insurance companies get seat belts, air bags, graduated licences, safety inspection, etc., our rates would reflect these savings. Yet my rates have gone up every year as long as I can remember."
There is another area I would like to bring to your attention. The idea that the industry has such a tight profit margin. We have been told if the insurance companies get seat belts, air bags, graduated licences, safety inspection, etc., our rates would reflect these savings. Yet my rates have gone up every year as long as I can remember. I still have no at fault accidents. The industry claims that the premiums are based on many factors, not just one's driving record. The industry also claims most of their liabilities are for the medical portion. Well it seems to me, a small portion of accidents require someone to go to the hospital. If they do require medical treatment the largest portion of expenses would be covered by OHIP. Therefore, the insurance companies are collecting premiums based on the expense of medical treatment, but most of the expenses are paid by OHIP. Now the insurance companies are collecting premiums on loss of income. Yet if one has insurance at work they cannot collect from what they have been paying for through their auto insurance. What other industry gets to collect money that the general public has to pay, but is likely to get no benefit from it. I content this rule is a windfall for the insurance industry.Most people who drive have a job. And a good portion of those people who have a job have accident insurance through work. I don't have these figures but my guess is the insurance companies were rolling their hands when this went through the legislature. No wonder the banks want to get into the insurance business!!!
Claim rates have gone down and premiums have gone up.
The insurance companies claim rates have gone down 12% since this new system went into affect. Of course these figures can be manipulated in many ways. I can't accept these figures if they are from the industry however. In 1997 when I bought my car I paid $720 for insurance. In 1999 I am paying $690 for the same coverage. The only problem with the industrie's 12% is my car is two years older and thus worth less. So, their liabilities are less. You can bet this year when I replace this car, those rates will be well over $720. All of that increase will be due to the value of the car going up, as hospital cost have not gone up 12 per cent in those same three years. A side note is, after my car was stolen in 1996, I had a anti-theft device put on the new car. The only insurance companies that would offer a discount for this device were the ones that had the highest premiums. That translates into I get no discount for making my vehicle safer from theft.
" I am not asking to get something for which I didn't pay, or don't deserve.
I am not trying to cheat anyone here. I am not asking to get something for which I didn't pay, or don't deserve. I don't want to take anything that isn't mine and I don't want someone taking from me that which is not theirs. As I see it these insurance companies are doing just that. They are getting something they did not earn or provide a service for, thus they are not entitled to these additional premiums.
As I see it these insurance companies are doing just that."
Somewhere someone has to represent the average person in these matters.
There are many people who are living on the edge economically. That is, many people who are working, need a car, and one of these abuses could mean the difference between getting to work in the morning, and not making it. If she can't get to work perhaps the family will suffer. If there are more people driving uninsured, perhaps that is an indication insurance is too costly for a segment of the Ontario population. What would you be inclined to do if you were trying to raise a family on $10 per hour? Then you receive an insurance bill for $1500. And you know you have to get to work tomorrow. Perhaps the current system is making otherwise honest people, dishonest?
" They band together to share information and ideas that are to benefit their particular cause not that of the general public."
I believe the government is relying on competition to keep the industry honest and fair. But as I think I have shown, competition though present is not doing all of what it was intended to do. When one sees all these insurance associations and groups such as IBC, broker associations, and the like, these are the equivalent of unions. They band together to share information and ideas that are to benefit their particular cause not that of the general public.
" there is a vast segment of the population in Ontario that want changes in the laws to reflect a fair system"
In conclusion, I must state that over the years I have talked to many people about their experiences with their insurance companies. The majority have expressed various levels of anger at how they were treated. It is my belief there is a vast segment of the population in Ontario that want changes in the laws to reflect a fair system. These changes should put the system back in balance for the consumer. I realize these companies employ many people in the Province, but they are also affecting many more people in a negative and damaging way. The current system already addresses the problem of bad drivers in a sufficient manner. The point I am trying to make is that good drivers are getting punished by this system now. Insurance is a necessity and it is also expensive, indeed a burden for many households. Since it is mandatory, it seems only fair that the consumer should be protected by getting what she pays for. It is my thought the consumer would be best served by keeping the system simple. If she has a loss, the insurance company should pay for that loss. The consumer then would understand what to expect when a claim is filed, and she would get what she is paying for. That would cut out all the if, then, and maybe's the insurance companies now employ to their advantage.
Fraud
One more note. It is my understanding the insurance industry's next area of business is to try and exploit, is fraud. The insurance company is working on trying to convince the government that fraud is even worse than we all imagined. I believe there is a good argument to show that there is not more fraud now then there was decades ago.
I thank you for your time and attention and trust you will find this letter of value.
Sincerely,
Mr. Ken Fougere
#159 1247 Huron St.
London, On.
N5Y 4X7
453-1220
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