Rising insurance premiums in Alberta
Posted on 2020-01-06
One of the steps the new UCP government in Alberta made is the undoing the cap on insurance premiums put by the previous Notley government. Insurance companies are free to be “competitive”, meaning they can raise the price. And voila! What we see is that they are raising the price. By the pure economics of it, it adversely affects the people of Alberta. Same service, higher price. Have you ever had a claim? It sucked, right? They gauged you, right? No oversight by any authority. All concessions go to the private insurance companies (and to other corporations at large) what the Notley government tried to limit. I am not saying that what the Notley government did was great either.
Let’s see the economics of insurance in Alberta (and everywhere else). There are about 100 (!) insurance companies operating in Alberta. It means 100 CEO pays, 100 board of directors and their pay, 100 times shareholder dividends, 100 times administrative overhead. They do what they do to make profit not to reimburse you for the losses you suffered. All this, of course, is built into the price you and I are paying. It does not make any economical sense whatsoever. This, to me, seems real red tape. But the mainstream logic is the reverse. Red tape is only at the government. You see, government is bad, it is inefficient by definition. And there is no real economic reason to support this claim. But that does not matter, what matters is the pure ideology: private is good, efficient and government is bad, inefficient.
So, if I were to suggest creating one or two government agencies to handle all insurance businesses in the province than I would be crucified on the cross. And that is exactly what I am suggesting. And I am not a statist. I don’t think everything should be state owned. But there are cases when having public oversight over things makes more sense than private business. Especially when it affects everybody, like insurance does. The agencies would be controlled by the public with recallable leaders. And the government does not work for profit, it would be much cheaper. This would make economic sense. Not serving an ideology.