Car insurance, and all insurance for that mater, is bad for everybody but the the insurance companies themselves. Insurance costs too much, is too restrictive on who can qualify, everything causes ones premiums to increase, and most of all, even if you have insurance, when it you have a legitimate claim it will be rejected based on some legal loophole.
Unfortunately the market and business practices used by insurance companies are such that they would ideally only ever collect premiums and never pay out for claims of any kind. Any situation where they have to pay out for a claim is a form of lost revenue, and thus must be recouped elsewhere. This is compensated for by raising premiums.
The different between car insurance and most other types of insurance is that you are required by law to have basic Third Party Liability to drive on public roads. In Canada essential heath insurance is “free” and one can choose to pay for private dental and life insurance. This makes perfect sense as you can choose to pay for as much or as little non-life or limb related coverage as you want.
By requiring people to pay for car insurance the government is essentially herding the public into the jaws of greedy insurance companies. I have two possible solutions to the problem, neither of which are perfect, but both of which are arguable better than the status quo.
Before I explain them though I want to show some basic calculations the figure out the full depth of the situation. Following the Fermi Problem method:
There are 12 Million people in Ontario
There are approximately 7 million cars in Ontario
There are approximately 20 collisions per 1000 cars
The average collision resulted in $5000 worth of damage
Considering an ownership rate of just above 1 car per person, 5 million car owners
Income from car insurance premiums = (7 million * 2℅ ) * $5000 = $700 million
Now for my two possible solutions:
The government sets a series of guidelines and restrictions on pricing for premiums, mandated costs for certain pre-existing conditions, when and where premiums can go up, and most importantly setup and independent review process for claims.
This solution would allow companies to still compete in the market but at the same time would help drivers get fair and affordable insurance coverage.
The second solution involves the government making car insurance a government-run service. This could be implemented in one of two different ways, either through making a profit off providing insurance (though at a reduced rate compared to current pricing) and then re-investing that money back into the province, or running the program as a not-for-profit and then only charging what the administration and claims cost actually cost the province. Both of these methods keep the money in the province and provide lower cost insurance.
While both of these options provide advantages and disadvantages either would mean lower premiums for Ontarians, something everyone can agree is a good thing.
