Insurers wait for word on government's no-fault.

Insurers wait for word on government's no-fault

Automobile insurance companies were adopting a wait-and-see attitude last month following the election of the New Democratic Party.

The Ontario NDP has long advocated government-run automobile insurance. During hearings on the former Liberal government's no-fault insurance plan, the NDP presented its policy as an alternative to the Liberal's plan. The policy was also an NDP plank during the August election campaign.

Under the no-fault program, approximately 90 per cent of all accident victims receive benefits directly from their own insurance company, no matter which party was at fault. In addition, only victims who are severely injured or the survivors of victims can sue for benefits.

Following his Sept. 6 election, Premier Bob Rae said he plans to introduce a government-run program during the NDP's first term in office.

Currently, there is government-run automobile insurance in British Columbia, Saskatchewan, Manitoba and Quebec. Since there are variations of government-run insurance, the province's insurers say the impact will depend on the type which is selected.

Welland-Thorold MPP Peter Kormos was the most vocal critic of the Liberal plan during the hearings and the person most likely to know which version the government will select. However, messages left with his Queen's Park office were not returned.

"I suspect Mr. Rae will take a close look at the Quebec system," speculated David Liddle, chief operating officer for National Frontier Insurance Co., the only private insurer in Northern Ontario. "This is just speculation on my part, but I believe that there will be numerous studies done before they make any changes."

"It is easy when you're in opposition to say things if you really don't think you're going to form the government," he added.

Under the Quebec system settlements for bodily injuries are paid out of a government fund, while insurance companies pay for damages to the auto.

At present Ontario's 160 private insurance companies employ approximately 44,000 people, including brokers, adjusters and agents, and they collect $2.5 billion in premiums annually.

Liddle said adopting the Quebec-styled program would allow the NDP to combine increased benefits for accident victims with increased disability and accident benefits for workers.

Liddle said if a government-run program was brought in, his company, which is expected to do about $11 million in auto insurance business this year, might be forced to lay off some of its 63 employees.

He said any reduction in auto insurance business could be compensated for by increasing business in other areas such as life and property insurance.

However, full government-run auto insurance is just one possible scenario.

According to Liddle, if the British Columbian model is adopted by the provincial government, the change would not be as drastic because independent brokers would still sell the policies.

"The commissions are lower, but that is because there is less work involved," Liddle said.

SAVINGS

The North Bay insurance executive doubts that consumers will see any reduction in premiums from government-run insurance.

"I can't see any cost savings to consumers, because there are not too many government agencies which operate as efficiently as a business involved in pure competition," Liddle commented. "You have to remember that Mr. Rae is an economist by training, and he knows what happens when you have 160 companies providing the same product. You have to be competitive by rate to stay in business."

The current no-fault plan is touted by the industry as a means of keeping premium increases to a minimum because it reduces court-related costs. Liddle said it is still too early to tell whether no-fault has worked or not.

"It will be the end of the year before we see any effects from no-fault," he said.