While corruption may have been the source of this particular business, the fact that insurance is required by law is a good thing. The counterfactual involves a bunch of uninsured judgement proof drivers clogging the road and ruining everyone else's day/life. The problem is already bad enough now when it is illegal to do.
Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees.
Otherwise, it's just an income-generating scheme for private parties.
Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is.
How do I know? Got told that after getting into an accident on a road trip. So much for a good thing.
> it should be provided by the state and paid for with taxes / annual registration fees
The free market is required to accurately price the risk for each driver.
A 45 year old female driver with no infractions is much less risk than an 18 year old male with a DUI, so the former should pay less in premiums. The current system is doing that.
I do not see how a state-provided solution would come up with "accurate" pricing for individuals. Some market is needed.
I could see how some people (especially in high risk groups) would prefer not to pay according to their risk, but I do not agree that is better for society.
A counterpoint (not necessarily my view but a view nonetheless) would be that if everyone pays into a single required insurance pool then the risk doesn't need to be accurately determined a priori. Each individual's rates might be the same, but they could be lower overall because there are more paying in. A low risk driver may pay more than they use, but it could be less than the market rate regardless.
The risk still needs to be accurately determined, even if not for each individual. If 100 people in a population will be injured and get a pay out of $100k, you need to know that to set general rates.
What I’ve seen in places that have government insurance is the government is constantly trying to backstop the insurance.
Why? It becomes a political hot potato when rates go up, so there is pressure to keep them down with lower premiums. The insurance body doesn’t care because the government will bail them out.
You can just update rates after the fact if necessary. I don't really see the problem with that. People with a bad history may get higher rates, just not based on risk analysis but based on their actual history.
By how much? Logically, the fair amount to raise rates would be the amount that compensated for their increased risk of doing it again. There you are, doing a risk analysis.
(If you had them directly pay for the damage they caused, that wouldn't be insurance, that would be a middle man for restitution.)
By some amount proportional to the damage caused, of course. The more times you cause damage, and the higher the damages, the higher your rates go over time.
I think my point is pretty clear without me coming up with a precise formula: instead of predicting rates, just adjust them based on history instead. After all, someone likely to cause repeated damage in the future is also likely to have caused it in the past.
The only major difference between the two approaches is that mine doesn't require someone to make predictions - which might be biased - in exchange for mine maybe under-charging someone with no negative history who is about to cause a huge amount of damage and then stop paying into the system (death, etc). But in those (rare?) cases, the fact that everyone is part of the system means that the single rare loss is amortized nicely and without bias.
>The more times you cause damage, and the higher the damages, the higher your rates go over time.
But by how much? If it's enough to fully offset the cost of the damage, that's not insurance, but a payment plan. If it's less than the cost of the damage, then you have to decide what it's going to be.
>The free market is required to accurately price the risk for each driver.
That same market means some will decide that not having insurance is a better deal. Tying insurance to something like drivers licences increases the cost of not having insurance.
>I do not see how a state-provided solution would come up with "accurate" pricing for individuals.
IIUC, that is actually a form of government subsidy, which exists only because there are places that are uninsurable due to flood risk. It is politically unpopular to tell people they have to self-insure because they picked a risky to live. If we decided that were something we were willing to tell people, there'd be no issue with letting the market handle it, same as most insurances.
You mean the same policy that resulted in a whole bunch of people living in flood zones? And which we can't get them to leave because it would be politically unpopular to raise their insurance premiums to reflect their actual risk? That seems more like an example of exactly why we don't want the government -- which inevitably means politicians -- setting insurance rates.
Government provided residential flood insurance is a horrible example of moral hazard and should be eliminated. Taxpayers shouldn't have to subsidize investors who choose to purchase property in flood zones.
British Columbia forces you to buy liability insurance from the provincial government and it's awful. The premium calculations are illogical and inefficient. Bad drivers are subsidized by good ones, the rates are among the highest in the country and the govt manages to lose money on it.
My experience in other provinces with private insurance companies was much better.
That's likely not because of government inefficiencies, but because a small segment of the population is responsible for the vast majority of costs. Mostly drunk drivers, to be frank - but also that certain lovely category of individual who feels that societal rules don't apply to them.
Private insurers can say "fuck no, we're not insuring you, you've got 2 DUIs, 6 speeding tickets, and numerous equipment violations" or make the cost of that insurance absurdly expensive, pricing them out.
If the government is providing the insurance, they likely have to say "yes" to everyone. Waiving the requirement to insure everyone is well and good until someone looks at the data and sees that your completely non-discriminatory rules are effectively discriminating against certain classes of people.
> The premium calculations are illogical and inefficient. Bad drivers are subsidized by good ones
Good drivers subsidizing bad ones is the entire concept of an insurance pool. The corrective mechanism is that if a driver reveals themselves to be bad enough, you make them stop driving.
No, it's not. The premise of an insurance pool is that the lucky subsidize the unlucky. Differences in premiums are supposed to account for good vs bad.
> Differences in premiums are supposed to account for good vs bad.
This would require a way to measure driving quality with perfect accuracy and no errors. I feel comfortable in my claim that (1) nobody can do this; (2) nobody claims to be able to do this; and (3) nobody believes that this might one day be possible.
Differing premium rates just mean that you have several pools, each defined by their premium rate, in which the better drivers subsidize the worse ones.
Insurance is one of those areas of knowledge where, unless you're an expert, you can easily be told true statements that are highly misleading. Overlap that with the law, and you get a fantastic tangle of misleading information that can cripple your ability to make good choices.
It's probably true that, technically, liability insurance is only available once the driver loses in court, but that means very different things than it implies. For one, the driver has no knowledge of the court case, in many situations. The insurance companies work with one another to figure out who is paying what, and the insured is largely uninvolved.
You can "be told" many things about a system you're unfamiliar with that sound, on their face, absurd, but upon inspection actually make plenty of sense. This sounds like one of those things.
> if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees.
It's not, even in theory, in most places, though. It's just a convenient option to a liability bond that most drivers choose.
> Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court. They don't have to follow that the police report says regarding whose fault it is.
Well, yeah. It's liability insurance. It has to pay when a legal liability is established against the driver. That is, exactly when the driver would have to pay in the absence of insurance.
Determining legal liability is what we have courts for, not police. The cops doing the courts’ jobs is a phenomenally bad idea.
>Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees.
>Otherwise, it's just an income-generating scheme for private parties.
Food and shelter are essentially "required" for everyone. Should those be provided by the state, to avoid it being "an income-generating scheme for private parties"?
>Food and shelter are essentially "required" for everyone. Should those be provided by the state, to avoid it being "an income-generating scheme for private parties"?
The answer is: yes, absolutely, and we essentially do that to some extent with food stamps and homeless shelters; but, of course, not nearly to the extend that we can and should.
Shelter isn't just "required" in scare quotes, though; it's illegal to be homeless (you can get charged with loitering, trespassing, etc. if you try living pretty much anywhere where you're not paying for it some way).
We all know that the rental market is a scam, since mortgage payments (i.e. what you pay to own the property, plus profit for the bank) is lower than the rent in most markets (sometimes even after adding property taxes on top).
We also know how zoning restrictions on construction of residential properties and high-rises artificially restricts the supply of housing precisely where it's needed: i.e. where the jobs are (Example #1: San Francisco Bay Area).
So yes, the housing market here is an incoming-generating scheme for landlords. To the extent that people joke that Silicon Valley is a machine to transfer money from venture capitalists to landlords through engineers' pockets.
Note that I am not saying that the state should be the only supplier of shelter, food, healthcare, transportation, and education. Just that it should be one of the players on the free market, with a cost of 0 (or barely above nominal).
That's how Europe does healthcare and education, and at the very least it shows that we can afford this on a grand scale.
>>Food and shelter are essentially "required" for everyone. Should those be provided by the state, to avoid it being "an income-generating scheme for private parties"?
>The answer is: yes, absolutely, and we essentially do that to some extent with food stamps and homeless shelters; but, of course, not nearly to the extend that we can and should.
The programs you described only satisfy the "provided by the state" part, not the "avoid it being an income-generating scheme for private parties" part. If you're arguing it's something like food stamps, then that calls for the state paying insurance premiums on behalf of drivers that can't afford it, not for some sort of government insurance program.
>Shelter isn't just "required" in scare quotes, though; it's illegal to be homeless (you can get charged with loitering, trespassing, etc. if you try living pretty much anywhere where you're not paying for it some way).
Sounds like it's actually required, both in the sense that in certain areas if you don't have shelter you'll freeze to death, and in the sense that you need somewhere to sleep. The fact that you can get a place to sleep by violating other people's property rights, or commandeering communal resources for your own needs (ie. camping on the sidewalk or public parks) doesn't mean shelter isn't required. You can plausibly feed yourself by stealing from farm fields across america, that doesn't mean food isn't required.
>We all know that the rental market is a scam, since mortgage payments (i.e. what you pay to own the property, plus profit for the bank) is lower than the rent in most markets (sometimes even after adding property taxes on top).
1. source for this? in the hottest markets at least, price to rent ratios are so insane that the only way landlords are making money is through appreciation
2. you forgot to factor in maintenance, and cost of capital
3. the fact that there's a better deal doesn't mean it's a scam. the fact that costco sells 96-roll pack of toilet paper, doesn't mean that the 6-roll pack they sell at regular grocery stores is a "scam". The same applies to rentals. They offer flexibility compared to ownership. factoring in transaction costs, buying houses isn't worth it unless you're planning to stay for years/decades.
4. it's funny you mention mortgages and how banks make profit on them. Are they a scam? surely it must be, because they're selling money to you for more than what they're buying money for (otherwise they wouldn't be making a profit)?
>Note that I am not saying that the state should be the only supplier of shelter, food, healthcare, transportation, and education. Just that it should be one of the players on the free market, with a cost of 0 (or barely above nominal).
>That's how Europe does healthcare and education, and at the very least it shows that we can afford this on a grand scale.
1. yet, even progressive region such as "europe" only does it for healthcare and education, and not shelter, food, and transportation. Why is that?
2. The US already has government provided education. have you heard of public schools and state universities? Seems like the problem with education isn't due to the government not getting involved, it's because government institutions aren't bothering to undercut private ones.
3. "europe" doesn't have a unified policy for healthcare. Yes, there are some countries where there's a healthcare system run by the government (eg. NHS in uk), and there are some that provide government insurance option in addition to private offerings (eg. germany), but there are also countries that have only have private insurance (eg. switzerland).
You mean, it turned a backwater decaying agrarian empire into a world superpower, twice (Russia and China)?
Side note: when the USSR held a referendum on whether it should be dissolved, most people voted to keep it (77% yes, 23% no) [1]. Things by far were not rosy in the late 80s (when a quarter of the nation votes for dissolution, things aren't great), but they weren't 30s either.
That's, of course assuming you mean the USSR/China and ignore all the other welfare states in Europe, as well as programs like foodstamps in the US.
> Hot take: if it's something that's universally a good thing that should be required of every driver, it should be provided by the state and paid for with taxes / annual registration fees.
Which it is in some jurisdictions, e.g., BC, Quebec. In the jurisdictions where it is done by the private sector, it is generally heavily regulated.
> Oh, and fun fact: the liability insurance isn't required to pay up anything unless the covered driver loses in court.
This depends on the jurisdiction: in the province of Ontario, with is a "no fault" area, there are few(er) court cases:
> Ontario has a "no-fault" car insurance system, but this does not mean that no one is at fault in an accident. The term "no-fault" insurance simply means if you are injured or your car is damaged in an accident, then you deal with your own insurance company, regardless of who is at fault. You don't have to go after the at-fault driver for compensation.
> Essentially, no-fault insurance in Ontario is that in the event of an accident (without or without collision coverage), all drivers involved will process individual claims through their own insurance companies to get coverage for damages and injuries. It’s a system that has prioritized the claims process for drivers who need reimbursement so that the drivers aren’t kept waiting.
