November 15, 2003
Wednesday, Nov. 5: “We’ve been impressed by your recent columns on auto insurance in the Post,” the insurance industry’s public affairs rep tells me over the phone. “Would you be willing to go to Fredericton next week and offer your views at a luncheon?” Thus began my adventure into the zany workings of lawmaking in New Brunswick.
|I replied as I always do when given a compliment and offered a speaking engagement. I thanked her for the former and quoted my fee for the latter. She accepted. I then sought to make my trip to New Brunswick more useful to Consumer Policy Institute, a non-profit group I head, by trying to make a difference at government hearings that were about to conclude.|
My columns on automobile insurance systems around the world, and which ones best deliver safety and value for consumers, had started a month earlier. I knew New Brunswick’s debate would have national significance. I asked the rep to try to arrange a long shot: a last-minute appearance before the committee, if necessary by ceding an insurance industry time slot to me.
She paused. “You wouldn’t be allowed to make your points,” she cautioned. “The mandate of the committee is limited to choosing between different forms of public insurance.” I requested that she try.
Monday, Nov. 10: Emelie Hubert, the researcher for New Brunswick’s select committee on public automobile insurance, phones me to discuss a possible appearance. “Will you have anything fresh to say,” she asks, explaining that she is exasperated by the tiresome presentations that the committee has had to endure from insurance industry representatives. I assure her that my presentation will be unlike anything the committee had heard. She schedules me to appear at 5 p.m. Wednesday, advises me on the weather, and suggests I bring walking shoes to take advantage of the city’s trails. Emelie (by now we are on a first-name basis) asks no other question about my presentation.
Wednesday, Nov. 12, 11 a.m.: I introduce myself to Emelie in the lobby of the Sheraton Fredericton, the site of both the luncheon and the hearings. She updates me on the many preposterous “scare-mongering” arguments that numerous presenters have made against a government takeover of the auto insurance industry. After several minutes of describing these people to me as jerks, it dawns on me for the first time that Emelie must think I am, like her, committed to public automobile insurance. Although she is the key staffer and the author of the committee’s final report, she somehow had missed my columns, which unambiguously opposed public auto insurance. I turn to her and set her straight. Emelie’s face blanches. I assure her that I will limit my remarks to public auto insurance and hand her an advance copy of my presentation, to let her see for herself. It describes me, my organization and the insurance industry’s role in financing my trip to New Brunswick.
1:30 p.m.: By now, I have given my luncheon address, followed by a flurry of media interviews, most of them with New Brunswick newspapers, radio and TV stations. The interviews occur outside the luncheon ballroom, in the hall that also serves an adjacent ballroom hosting the hearings. The reporters delve into why I believe public auto insurance increases the fatality rate and harms consumers. The CBC-TV reporter, who arrives late, is an exception. She cares only about scandal – the expense to which the insurance industry went to fly me to Fredericton; the insurance industry’s self-interest in bringing a critic of public auto insurance. She then asks me to walk up to several people standing in the hall 15 feet or so away, and engage them in conversation. I ask her why. She explains that she wants to end the interview with film footage of me “with my colleagues in the insurance industry.” I decline her invitation – the people she was pointing to were perfect strangers to me. Several minutes later her cameraman approaches me sheepishly, and asks me to please co-operate by staging the conversation. It won’t take long, he indicates. I decline again.
2 p.m.: Emelie confronts me, furious. “You deceived me,” she declares. Perplexed, I ask how. I discover that she had expected me to identify myself as an opponent of public auto insurance in asking to appear at the hearing. “But we’re honourable,” she states. “We’ll let you speak anyway.”
3 p.m.: After returning from a CBC-radio studio interview, a reporter at the Sheraton tells me that the committee’s chair, Elizabeth Weir, may bar me from appearing. In later CBC news reports, I will discover that she criticized me for misleading her committee by not volunteering that insurers had paid my way, even though the application form for presenters asks nothing about funding, and neither did Emelie.
5:30 p.m.: It is finally time for me to appear. The genial deputy chair, who had been running the afternoon’s proceedings, gives way to Ms. Weir, who returns to the hearing room to take custody of me. She is less genial. Minutes earlier, she had ordered the sole cameraman remaining in the hearing – a freelancer working for the insurance industry – to leave. He had filmed that day’s previous presentations, including MADD, the NDP and the New Brunswick Law Society. She would not allow a visual or audio record of what would follow.
All other presenters had been allowed to make their comments uninterrupted, following which they had all been questioned by committee members. Ms. Weir interrupted me almost from the start, and repeatedly, on the pretext that my analysis did not have New Brunswick data. When I finished my presentation, I invited questions. From the expression on Ms. Weir’s face, I knew none would be forthcoming. She quickly panned the committee members to her left, then her right. “No questions,” she smiled. “The meeting is adjourned.”
This had been my first direct taste of New Brunswick-style democracy. The freelance cameraman – a veteran BBC and CBC Newsworld International journalist who had covered Third World wars, natural disasters, corrupt administrators and tin-pot dictators, took New Brunswick in his stride. As he had done in other places, at other times, when ordered by local authorities to stop filming, he slowly gathered his equipment and packed it away, all the while letting the camera roll.
Lawrence Solomon is executive director of Urban Renaissance Institute and Consumer Policy Institute, divisions of Energy Probe Research Foundation. E-mail: LawrenceSolomon@nextcity.com; Postscript to a series.
Censored: What the Weir committee didn’t want New Brunswickers to hear
Saturday, November 15, 2003, National Post
Excerpted from Lawrence Solomon’s Nov. 12 testimony to New Brunswick’s Select Committee on Public Automobile Insurance (The Weir Committee).
When other jurisdictions moved to public insurance, or away from systems that stress full accountability, the death rate immediately went up, typically between 5% and 10%. In Quebec under a no-fault system, according to a University of Toronto study, it climbed by almost 10% within a decade. In B.C., which has a tort system but not a system to actuarially determine price, an extra 140 people a year die, according to an Insurance Bureau of Canada study. Similar findings have been found for various U.S. jurisdictions and an Australian jurisdiction, and in New Zealand, which saw a 16% increase in fatalities after its switch to public insurance in 1972.
If New Brunswick moves toward a public system, the legislature should be careful to minimize the loss of life that will almost surely accompany this move. I believe a determined province could do much better than other jurisdictions have done but courage and integrity would be required. To avoid needless loss of life, politicians would need to stand up to seniors and youths – the same groups that now complain that private insurers are discriminating against them.
This is the challenge in a public insurance system: In a system that decides rates politically, it takes great courage for politicians to tell their constituents that they are risky drivers. But if they don’t level with their constituents, innocents will die.
The record to date is not good. Politicians are human, and they succumb to special interest groups. No public insurance system I’m aware of has performed as well as private tort systems that are faithful to actuarially based premiums.
Let me provide some statistics from the OECD, which compares death rates among various countries. The English-speaking nations, it is widely accepted, tend to outperform the rest of the world because the British system of torts and strict liability, and market-determined pricing. The British system is one which Canada, the United States, Australia and New Zealand inherited. These legal and economic traditions have served us well.
The U.K., which has remained truest to insurance principles, has an especially low death rate. The U.K. doesn’t have an equivalent to the Facility Association here in New Brunswick, which keeps poor drivers on the road at the expense of good drivers. In the U.K., drivers are most accountable because they face premiums that reflect the true costs that they foist on society.
Canada and the U.S., which have some jurisdictions that have strayed far from the strict accountability we see in the U.K., do well but less so. The worst of the English common-law nations is New Zealand, which abandoned accountability for a fully public system.
I suggest that any public system that New Brunswick adopts build in iron-clad mechanisms to minimize the loss of accountability in a move to public insurance. For example, if the death rate increases, the minister in charge and the responsible deputy ministers should face penalties: perhaps they should be forced to resign, or have significant pay cuts. To show that New Brunswick is serious about minimizing the loss of life that typically accompanies public insurance, these penalties should be legislated, and be a litmus test of responsible government.
More is needed, too. Generally, when governments operate businesses, they are held to a lower standard than the private sector. For example, it is much easier to prosecute a CEO whose reckless policies lead to loss of life than a government minister, or government employees, who can claim to be merely following government policy. New Brunswick shouldn’t tolerate this double standard, particularly when we are dealing with public safety. I recommend that any public system of auto insurance hold government workers, and elected officials, to the same standard that would apply to a counterpart in the private sector. By making the operators of a public system fully liable for policies that lead to loss of life, including criminal liability should it come to that, we are less likely to see politicians succumb to pressure from the electorate. If the elected officials and the bureaucracy do not become fully liable, then I fear that nothing will prevent carnage on New Brunswick’s roads.
Killing the industry that saves lives
Private insurance saves lives
2 Fast 2 Cheap
Americans love their car . . . insurance
Letter to the Editor
National Post, December 8, 2003
Re: Kangaroo Court, Nov. 15.
As New Brunswick attempts to push through public auto insurance, it is no doubt touting the schemes in other provinces as being successful. Nothing could be further from the truth in Manitoba. Below is a list of the treatment taxpayers can expect:
- Citizens will lose their right to compensation for personal injuries. In Manitoba, the government passed a package of bills which they called “no fault” legislation. They are actually laws which put the Public Insurance Commission (called Autopac) above the law. They removed the claimant’s right to sue for damages. They have a list of “compensations,” which amount to payments for what they treat as the inconvenience of being injured. They do not recognize pain and suffering.
- Public insurance proponents will claim it is cheaper than private insurance, but the medical costs of accidents are paid by taxpayers, not the insurance commissions.
- In spite of these advantages, public insurance still cannot be competitive, so claims adjusters and managers are paid what they call “performance bonuses.” The adjusters now have a personal interest in ensuring that a claimant won’t receive a reasonable settlement. In Manitoba, when they took away the claimant’s right to sue Autopac, they replaced it with an arbitration procedure. Like most arbitrations, independent parties are supposed to represent them. Autopac, however, has a list of persons they use and all the appraisers want to get on this list, so they do what they are told.I have just completed an arbitration procedure and they have dragged it out for almost three years. I have had to spend about $2,500 in arbitrators and legal fees to try to stop them from tampering with the arbitration procedure. I ended up getting $10,500 for a $15,000 car instead of the $3,500 they wanted me to take. They refused to disclose where their values come from, and when their arbitrator and mine decided on an independent umpire, Autopac officials didn’t like his value ($13,900), so they wouldn’t let him be the umpire.
They also insisted on keeping custody of the car while we were in arbitration, but it was treated so badly that it looked like a wreck by the time any independent person could view it. Parts were stolen, the new paint was all chipped, and the new interior was all torn and scratched.
This is the reality of public insurance schemes. They are inefficient and, like all bureaucracies, they operate for their own interests instead of the people they are supposed to serve.
Ron Lyons, Winnipeg
National Post, November 24, 2003
Assuming the details of Lawrence Solomon‘s treatment by the Weir Committee are completely accurate, the committee’s behaviour was not only undemocratic but unwise. Had the committee been more interested in thoughtfully examining the validity of Mr. Solomon’s arguments instead of nursing feelings of perceived deception, an intelligent discussion could have made a useful contribution to the automobile insurance debate.
Mr. Solomon’s basic argument appears to have been that public auto insurance necessarily means unaccountability; unaccountability by drivers and unaccountability by government.
These unaccountable high-risk drivers then generate more than their share of highway “carnage” because under a public system insurance rates are not “actuarially based.”
Here are some questions the committee should have asked but did not:
1. Are there not two issues here: the pros and cons of a public system and the pros and cons of age-based actuarial premiums?
2. In your research, Mr. Solomon, were you unable to find even a single example of a public auto system that met at least some of your “accountability” requirements?
3. If you could find no example whatsoever of an accountable public system, is it impossible to imagine one that could effectively remove high-risk drivers from the roads and yet at the same time incorporates the large-scale efficiencies inherent in a public system?
4. If the principal goal is to remove high-risk drivers from the highways is an age-based actuarial system the most effective means?
Shame on the committee for apparently not only treating Mr. Solomon shabbily but for letting his arguments go unquestioned.
He won the day by default!
Donald S. Dunbar, Hillside Boularderie, N.S.