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OK, so some of you may have heard about the proposed changes to the Ontario auto insurance policy. If you haven't, the Ontario government is proposing changes to the "Accident Benefits" regulations - these are the medical benefits available to people who have been injured in a car accident, or for that matter, injured as a direct result of the use/operation of a motor vehicle. (this apparently means that if you slip and fall while putting air in your tires, you get the same medical benefits as someone who got into a major t-bone accident in an intersection.)(but I digress...)
Of course, as soon as this kind of news comes out, people start making comments about how we shouldn't have to pay so much premium because the insurance companies are all rich anyways, and insurance is just a get-rich-quick scam for insurance companies, etc, etc, etc....
It REALLY annoys me when people spout off about something about which they have absolutely NO clue whatsoever.
Newsflash: Insurance companies LOSE MILLIONS OF $$ every year in Ontario due to the auto insurance regulations.
How is it possible when we pay so much in premium, you ask?
Allow me to demonstrate:
Let's say you pay $1500/year in premium for 10 years. You have therefore paid the insurance company $15,000 total.
Then, you get in the dreaded fender-bender. Not a lot of damage to either the car or yourself, but enough that you need a body shop, some physiotherapy, and some time off work.
(in other words, a typical whiplash injury)
It might cost about $3000 to fix your car.
Then comes the medical treatment, medical assessments, income replacement benefit, throw in some housekeeping for good measure, and hey-presto, the insurance company has paid out $40,000 in accident benefits.
(and that's a conservative estimate)
Well let's see, so far the insurance company has paid out $43,000, versus the $15,000 you've paid them.
BUT, the accident was your fault. As a result, you get sued by the person you hit to the tune of $70,000. Paid, of course, by your insurance company.
(once again, a conservative estimate)
After all this, you've paid the insurance company $15,000, while the insurance company has paid out $113,000. A bit of quick head-math, and you'll realize the insurance company just found itself $98,000 in the hole on your claim alone.
(Don't forget, the insurance company also has operating costs to be paid: rent and maintenance of office space, office supplies, salaries for employees, etc...)
Getting clearer?
Yes, the insurance companies invest their profits, but I don't think they get a 650% return.
Please also keep in mind that the above demonstration was for a legitimate, un-inflated claim. I won't even get into how much money flies out the door on an inflated, fraudulent claim. (and the annoying part is, the insurance companies can't even do a whole lot about the fraud thanks to a very plaintiff-friendly legal system.)(but once again, I digress...)
I guess the point I'm trying to get across here is, please don't open your mouth to level accusations until you actually know the story. Yes, we all feel we pay too much for auto insurance. But please don't blame the companies that provide that insurance, and who lose money in the process. Let's blame the source: legal systems that allow claimants to get away with fraud (sometimes blatantly!), claimants who defraud the system, and healthcare providers who bill the absolute maximum they are allowed, often for treatment they didn't actually provide in the first place.
If you don't believe the part about insurance companies losing money, just take Liberty Mutual as an example. They sold their Canadian operations and got out of Canada because they were losing too much money in Ontario. I think if the insurance companies providing auto insurance in Ontario were to make their accounting books public, you'd be very surprised at what you would see. These companies might make some profit on other lines (ie. life insurance, disability, house insurance, business, etc.) but auto insurance is a guaranteed way to lose money, and a lot of it.
Still don't believe me?
Well, I guess that's your problem.
Just don't be complaining to me about it.
Of course, as soon as this kind of news comes out, people start making comments about how we shouldn't have to pay so much premium because the insurance companies are all rich anyways, and insurance is just a get-rich-quick scam for insurance companies, etc, etc, etc....
It REALLY annoys me when people spout off about something about which they have absolutely NO clue whatsoever.
Newsflash: Insurance companies LOSE MILLIONS OF $$ every year in Ontario due to the auto insurance regulations.
How is it possible when we pay so much in premium, you ask?
Allow me to demonstrate:
Let's say you pay $1500/year in premium for 10 years. You have therefore paid the insurance company $15,000 total.
Then, you get in the dreaded fender-bender. Not a lot of damage to either the car or yourself, but enough that you need a body shop, some physiotherapy, and some time off work.
(in other words, a typical whiplash injury)
It might cost about $3000 to fix your car.
Then comes the medical treatment, medical assessments, income replacement benefit, throw in some housekeeping for good measure, and hey-presto, the insurance company has paid out $40,000 in accident benefits.
(and that's a conservative estimate)
Well let's see, so far the insurance company has paid out $43,000, versus the $15,000 you've paid them.
BUT, the accident was your fault. As a result, you get sued by the person you hit to the tune of $70,000. Paid, of course, by your insurance company.
(once again, a conservative estimate)
After all this, you've paid the insurance company $15,000, while the insurance company has paid out $113,000. A bit of quick head-math, and you'll realize the insurance company just found itself $98,000 in the hole on your claim alone.
(Don't forget, the insurance company also has operating costs to be paid: rent and maintenance of office space, office supplies, salaries for employees, etc...)
Getting clearer?
Yes, the insurance companies invest their profits, but I don't think they get a 650% return.
Please also keep in mind that the above demonstration was for a legitimate, un-inflated claim. I won't even get into how much money flies out the door on an inflated, fraudulent claim. (and the annoying part is, the insurance companies can't even do a whole lot about the fraud thanks to a very plaintiff-friendly legal system.)(but once again, I digress...)
I guess the point I'm trying to get across here is, please don't open your mouth to level accusations until you actually know the story. Yes, we all feel we pay too much for auto insurance. But please don't blame the companies that provide that insurance, and who lose money in the process. Let's blame the source: legal systems that allow claimants to get away with fraud (sometimes blatantly!), claimants who defraud the system, and healthcare providers who bill the absolute maximum they are allowed, often for treatment they didn't actually provide in the first place.
If you don't believe the part about insurance companies losing money, just take Liberty Mutual as an example. They sold their Canadian operations and got out of Canada because they were losing too much money in Ontario. I think if the insurance companies providing auto insurance in Ontario were to make their accounting books public, you'd be very surprised at what you would see. These companies might make some profit on other lines (ie. life insurance, disability, house insurance, business, etc.) but auto insurance is a guaranteed way to lose money, and a lot of it.
Still don't believe me?
Well, I guess that's your problem.
Just don't be complaining to me about it.
Well I am thoroughly educated. I really had no idea. I don't think I've ever flapped my jaws about it, but I've probably thought once in a while that I pay alot of car insurance and that all insurance companies make tonnes of money. Hmm. How about that.