No fault insurance is, in a nutshell, the provision of insurance qualified by

• the elimination of the legal damages for pain and suffering,
• the establishment of caps on legal damages, and
• many limitations for consumers to sue.

In the last few years auto insurance premiums have been skyrocketing in Canada and the issue of publicly or privately run insurance programmes have surfaced along with the issue of including no fault clauses (tort reform).

I found very telling the results of a recent insurance poll, conducted by the NFO Cfgroup, which found that the premiums of publicly run insurance programmes have increased at a much lower rate than the corresponding premiums for privately run programmes. Seventy-two percent of the poll's respondents believed that the higher premiums were caused by the motivation of the insurance companies to increase profits. On the other hand, the insurance companies have justified their higher premiums on the need to recover their past losses in the stock market.

Given the progressively higher income gap between the rich and the poor, and the narrowing of the so called middle class, it becomes obvious that the losses of the stock market have been the fault of both fraudulent speculators and big businesses. Therefore, under the present market conditions, it would be wise to have publicly run auto insurance programmes and let the fraudulent speculators and big businesses cook their goose.

The no fault clauses of insurance programmes must not be confused with the issue of publicly or privately run insurance, and the fact that the provinces of Alberta and Ontario, which have private insurance, are contemplating legislation to freeze premiums and limit coverage (no fault) is just a cover for the shortcomings of the insurance industry under the present Free Market.

References

Pertinent articles published in Ensign

deSantis, Mario and James deSantis The Incredible Abuse of Saskatchewan No-Fault Insurance May 2000, Ensign

NFO Cfgroup Canadians Back Government Intervention on Car Insurance November 5, 2003 http://www.nfocfgroup.com/news/03.11.05-car_insurance.pdf