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Tuesday, August 24, 2010

The Car 'Insurance' Fraud. Another tax. Another state-mafia connexion.

A letter to the Car insurance mafia-cartel.

by StFerdIII

Statism and other cults of control have as their basic premise this one cherished ideal: deny choice. The Marxist-Fascist-Communist vision of the world, is that humans are idiots, too dumb, too neurotic, and too supine to make a proper choice. Demand for a service must be managed by the state. How can the poor, the old, and the unwashed possibly make a choice ?! On the supply side, the statist cult deems that all suppliers of any product or service, and anyone using and deploying capital are criminals, brigands, marauders and by nature ineffably malevolent and fraudulent. They can't be trusted. The market is thus an 'immoral and importunate' form of human interaction for these very clever minds. There is no true demand, because the average person does not understand what is 'best for them'. There is no true supply since anyone engaging in manufacture, trade or business is a criminal. Thus the nativist and savagery of untamed and 'red-in-the-tooth' competition, must be 'moderated', 'equalized', and socialized.

Entire swathes of the market are government managed, controlled and regulated. This is what is called a 'Price Cartelization'. When government regulates and works in collusion with firms in a 'market' to control supply, prices, product details, specifications, and distribution; you have the classic example of a state created profit-maximizing cartel. The market is thus non-existent. Industries in North America which are subjected to this distortion of price, supply and demand include inter-alia and in varying degrees of corruption; eggs, dairy, beef, poultry, telecommunications, energy, health insurance, gasoline, lumber, car production, and of course car insurance. Price and profit guarantees corrupt the functioning of supply and demand and destroys the individual's power to protect him or herself from taxes, regulatory fees, and higher costs. It is brigandage, condoned and abetted by the state.

In every western nation car insurance is mandatory. It is managed by the state. This is one of the greatest frauds and tax gathering mechanisms in your life. Over your driving lifetime you will pay between $100.000 and $200.000 net income, in insurance fees for the privilege [and all states name driving as a 'privilege'] of driving your car. This is a fantastical sum of money. Yet most people ignore it. This sum of cash would solution most people's debt problems, or provide for higher education for their children; or pay off a large part of their retirement woes. Consider that over 90% of people will never make a claim, or in any way access this money. In essence you have simply transferred to governments, and their insurance company 'partners' a vast sum of your personal wealth, for no good reason. What else should we call it but state-sanctioned theft?

In any event a system which negates choice, price point competition, and consumer prerogative, is a statist cartel. It is as simple as that. Car insurance rates are absurd and the higher the regulatory and governmental interference the worse is the fraud, the premiums paid and the lack of consumer power. As I wrote before:

Car insurance. A recent study maintains that in the good Canadian Democratic Republic [D.R.] car insurance rates are only 30% higher than in the US, and only, [in the industrialized heartland of the communal paradise], running at $1300 per year. Sure they are. I don’t know of one single person amongst say 100, which has a car insurance rate that low in Canada’s urban heartland. Car insurance rates are far higher than some accounting ‘mean’ average and as government regulation increases, so does fraud, rates, and consumer frustration. In Canada alone I counted 59 regulatory bodies and agencies involved the car insurance market – am I to believe that all of these are to protect me and to benefit me? Doubtful.

50 or 60 odd players in the car insurance market? What moron crafted this policy?

How about this? There is absolutely no reason for mandatory car insurance. It is simply a gigantic fraud. It follows the pattern set by other 'caring' and 'compassionate' government programs, designed to save the world; the children's future and to prevent old people from eating dog food, and to journey in happiness to their second or third vacation home in style and ease. The car insurance industry is not a market. It is closed. It is regulated. It is taxed. All policies are set by bureaucrats. There is little price or policy choice. The consumer has no power. In fact 35% of all policy premiums are taxes, regulatory fees and taxes on the tax and regulatory fees. Some 10-20% is to cover fraudulent claims. The rest is tightly priced according to 'grids' provided by the government to the insurance market. Thus 'shopping' around is not going to help you find a better policy.  Madness and immorality. 

Untrue assertions make up the pricing grid issued by grinning bureaucrats. Speeding tickets for instance have no correlation whatsoever with accidents – especially for normal or moderate speeding. The state coercion force, called the 'police' arbitrarily and selectively hands out 'speeding' infractions to motorists who deign to go faster than very subjective speed limits. There is no reason why someone who is driving 20 km / h over a posted and quite disingenuous speeding limit should be punished by higher premiums. Any system which is not consistent and subjective cannot be fair. If you are going to punish that terrible 'driver' for going 15 km/h over the limit in a 'school zone', why not then punish those driving too slow on highways; those causing accidents but are never hit directly; those driving while distracted; those driving while stoned; those driving while tired; and those driving aggressively? Why is the system so obsessed with punishing someone driving perfectly fine but perhaps a little quickly? And where is the direct correlation between motoring 20 km/h over a 'limit' and higher insurance costs in the future?

Similar arguments can be made about all the assumptions contained in the government's pricing grids. Age, sex, location, type of vehicle, length of driving – all these and more are just subjective inputs which often-times bear little relationship to reality. Yet the price models drive out premiums which punish some and benefit others. Any such state-controlled pricing mechanism must by definition be unfair, dishonest and corrupt.

The purpose of car insurance is to collect taxes, regulatory fees, and to enrich the insurance cartels which then feed campaign money into political campaigns and political actors who will protect the system. This is every firm's nirvana. Produce protected profits, aided by the government, and under the cover of wonderful rhetoric. The individual will lose $200.000 of hard cash. The state and its insurance supporters suck at the teat of a public cash cow.

Liberate the market. Give us some choice. And if you can't or won't do that, three simple 'options' would dramatically lower costs, premiums and put reality back into the system:

  1. Opt-in to buy car insurance as managed the loving-caring state.

  2. Opt-out and if and when you get into an accident you will pay the damages from your cash account.

  3. If you opt out and you can't or don't pay the damages from your cash account, than the government will pay it for you and you will be forced by law, to pay back the government over a period of time, monthly, whatever amount you can afford. Failing that [if you are unemployed], the money will come out of any state transfers now and in the future until the balance is paid.

Simple. A derivative of living in reality is that by giving people the option to opt-out, you will see that driving improves, and that car insurance rates must come down in order to attract buyers. Those of us who don't feel it is our 'duty' to pay out $200.000 over our lifetimes to the criminal mafia of the state-insurance industry, will be able to invest those funds in our retirement, or to purchase products and services and stimulate jobs. Everyone wins.

Feel free to use this letter which I sent to the powers that be. Pissed ? Oh yes. Losing $200.000 over my lifetime is hardly a case for jubilee.

I understand that the non-market nature of the car insurance policy industry, precludes appropriate pricing and competition. 
There is no policy or price flexibility in a government run, taxed and regulated non-market system in which taxes, regulatory fees, and taxes on the taxes and regulatory fees make up 30% of my payments. 
I also understand that some of the record profits being produced by insurance companies will find their way into various political campaigns and the elections of very-clever politicians who will keep the industry regulated as a price cartel. 
I also understand that rhetoric and mindlessness are more important than actually having an insurance market which pays for accidents and one which is based on reality, the world of the 5 senses and consumer choice. 
I also understand that the state enforcement / coercion officials known as the police, have a duty to protect the children's future by handing out road taxes, known as speeding tickets, to people who are transgressing completely arbitrary speed limits imposed by the government. 
In fact I pass by no less than 3 such coercion - road tax officials each day - all of them deeply concerned no doubt about 'public safety' and the children. 
I understand that there is no relationship whatsoever between a speeding ticket, accidents and needed car repairs, but that it is simply a wonderful opportunity for the government-insurance cartel to impose higher rates and collect more profits and political campaign money. 
I also understand that the vast quantities of money I pay into the car 'insurance' market - $200.000 over my driving lifetime -- will never be used by myself, will never be accessed and will serve absolutely no purpose - except to enrich insurance companies who can take my earned wealth and use it to settle other people's problems and accidents. 
I understand that in essence car insurance is a gigantic theft of my money, and an imposition by the state to enrich its coffers and that of the price cartelized and policy managed entities known as 'insurance' companies, which should be better known as government-backed and regulated mafia gangs.
Most sincerely, and with no tender wishes,
Craig Read.” 


 Report by Mark Milke for the Insurance Bureau of Canada

Cato on the regulatory costs in the US:

60 Regulatory Bodies in Canada involved in some way, in the car insurance market and regulation. How pathetic and absurd is this??

1.Canadian Insurance Industry Organizations
2. Canadian Life and Health Insurance Association (CLHIA)
3. L'Association canadienne des compagnies d'assurances de personnes (ACCAP)
4. Canadian Association of Mutual Insurance Companies (CAMIC) / L'Association canadienne des compagnies d'assurance mutuelles (ACCAM)
5. Ontario Mutual Insurance Association (OMIA)
6. Insurance Bureau of Canada (IBC)
7. Bureau d'Assurance du Canada (BAC)
8. Insurance Institute of Canada (IIC)
9. Institut d'Assurance Canada (IAC)
10. Center for Study of Insurance Operations (CSIO)
11. Le Centre d'etude de la pratique d'assurance (CEPA)
12. Canadian Institute of Actuaries (CIA)
13. Institut Canadien des Actuaires (ICA)
14. Insurance Broker Association of Canada (IBAC)
15. Association des courtiers d'assurances du Canada (ACAC)
16. Advocis - The Financial Advisors Association of Canada
17. Canadian Coalition Against Insurance Fraud (CCAIF) / La Coalition Canadienne Contre la Fraude (CCCFA)
18. Canadian Life and Health Insurance Compensation Corporation (COMPCORP)
19. Societe canadienne d'indemnisation pour les assurances de personnes (SIAP)
20. Property and Casualty Insurance Compensation Corporation (PACICC)
21. Societe d'indemnisation en matiere d'assurances IARD (SIMA)
22. Canadian Life and Health Insurance OmbudService (CLHIO)
23. Service de conciliation des assurances de personnes du Canada (SCAPC)
24. The General Insurance OmbudService (GIO)
25. Service de conciliation en assurance de dommages (SCAD)
26. Insurance Broker Association of Ontario (IBAO)
27. Registered Insurance Brokers of Ontario (RIBO)
28. Insurance Brokers' Association of Saskatchewan (IBAS)
29. Canadian Insurance Accountants Association (CIAA)
30. Canadian Insurance Laws
31. Insurance Companies Act (i-ii.8) and related regulations
32. Alberta: Insurance Acts & Regulations
33. British Columbia: Insurance Act & Insurance Corporation Act (Chapter 226-232)
34. Manitoba: Insurance Act (I40) & Insurance Corporations Tax Act (I50)
35. New Brunswick: Insurance Act (i-12)
36. New Brunswick: Insurance Act (i-12) - Regulations
37. Newfoundland and Labrador: Insurance Act (i10), Insurance Contracts Act (i12), Life Insurance Act (i14)
38. Nova Scotia: Insurance Act (Chapter 231) & Regulations (81/2000, 94/96, 142/90)
39. Nunavut: Insurance Act
40. Nunavut: Insurance Regulations
41. Ontario: Insurance Act (I8) & Regulations
42. Prince Edward Island: Insurance Act (i-04)
43. Quebec: Lois sue les assurances (A25..A32) et Reglements
44. Saskatchewan: Insurance Act (s-26) & Regulations

Canadian Insurance Regulators & Councils
1. Office of the Superintendent of Financial Institutions (OSFI) Le Bureau du Surintendant des Institutions Financieres (BSIF)
2. Canadian Council of Insurance Regulators (CCIR) / Conseil canadien des responsables de la reglementation d'assurance (CCRRA)
3. Alberta: Alberta Superintendent of Financial Institutions
4. Alberta: Alberta Insurance Council
5. British Columbia: Financial Institutions Commission of British Columbia (FICOM)
6. Province of Manitoba: Consumer & Corporate Affairs - Financial Institutions Regulation Branch
7. New Brunswick: Department of Justice - Insurance
8. Newfoundland and Labrador: Department of Government Services and Lands - Insurance & Pensions
9. Nova Scotia: Superintendent of Insurance
10. Nuavut: Government of Nunavut
11. Ontario: Financial Services Commission of Ontario
12. Prince Edward Island: Office of the Attorney General - Consumer, Corporate and Insurance Division
13. Quebec: Autorite des Marches Financiers
14. Saskatchewan: Financial Services Commission - Financial Institutions Division
15. Saskatchewan: Insurance Councils of Saskatchewan