Government-run insurance

The fact is that MPI in 2001, and ICBC in 2000, did pay dividends to policyholders. However, advocates of government-run auto insurance have failed to mention that MPI had a deficit of $97 million following that surplus distribution and had to transfer $93 million from its capital surplus reserves to pay for it. This reserve has been declining steadily from $143 million in 2001 to $42 million at the end of 2003. Increasing claims pressure (claims costs in 2001 were $30 million more than expected) and a severe weather event would drain this reserve very quickly. MPI estimates that a severe hailstorm could increase claims by as much as $50 million (2001 annual report).

In ICBC’s case, the corporation lost $250 million in the year following the dividend. It couldn’t afford the dividend but paid it out prior to an election. In exchange for the $100 each received, drivers had their deductibles doubled and premiums raised and many were transferred into more expensive rating territories. ICBC paid for this giveaway through a reduction in reserves, which are now at dangerously low levels. This dangerous, politically motivated "dividend" is a perfect example of what would be wrong about government-run insurance, not what would be right about it. This is not how to run a business.

Finally, dividends are not unique to government-run insurers. Policyholders in private insurance markets can also receive policyholder dividends, where the financial situation of the company warrants, if they are policyholders with mutual companies.This has not proven to be true in BC. BC’s incidence of uninsured drivers is estimated to be about the same as that of other provinces. In fact, data/estimates from provincial ministries of transportation indicate that the incidence of uninsured drivers is lower in both NS and NB as compared to BC.

The British Columbia Ministry of Transportation reported that 65% of persons prohibited from driving in BC continue to drive without insurance. This alone represents at least 10,000 uninsured drivers on BC’s roads.

Furthermore, New Brunswick’s motor vehicle injury rates are below national averages. BC, on the other hand, is well above the national average for injuries and deaths from car collisions. Government-run insurance does not create safer roads.