April 1, 2004 by John Morin
Back in 1978 I had been an insurance broker for only five years when I found myself demonstrating in front of the National Assembly building in Quebec City. We were incensed that the recently elected government was going ahead with its plan to nationalize auto insurance.
Against all our efforts however, a law was passed whereby the provincial government became the sole insurance provider for bodily injury damages to any passenger or pedestrian involved in an automobile accident. There would be no seeking of fault, no lawsuits and no private insurance industry involved. Premiums would come from a surcharge on all drivers’ permits and vehicle registrations. The acquired funds would pay for medical expenses and compensate injured parties on an equal scale for loss of life, limb and income. Limits were set to capture the needs of the great majority of accident victims while anyone requiring larger amounts could purchase additional disability or life insurance through the private sector.
That year insurers were forced to return all unearned bodily injury liability premiums to policyholders. Most insurers simply cut checks and forwarded them directly to the assureds while only a few asked brokers to cough up their commissions. The insurance industry was in an ugly mood and, if I remember correctly, lawyers seemed a little perturbed as well. On the other hand, government also decreed private automobile insurance to be mandatory for a limit of $50,000 on property damage liability and continuing on the tort system. Outside the province this policy must also cover bodily injury liability and carry the mandatory limit required in that province or state.
So, hence we set forth into the wild blue yonder. Would consumers accept this new government role in their lives and the proposed levels of compensation? Would insurers and brokers survive? Would lawyers need to moonlight as plumbers and suddenly find more lucrative pursuits?
It ends up 26 years later that most, if not all, people in the Quebec automobile insurance industry will tell you they would never want to go back to what it was before. Many feel however, that the government could have come up with the same rules but let private industry administer the program. After all we were not against no-fault. We were against government insurance.
Early on, the loss of bodily injury premium was somewhat compensated by additional policies brought about by mandatory property insurance. On the claims side, insurers no longer had to deal with out of control medical and paramedical costs, excessive and punitive court settlements and related legal fees. For consumers, things were a little rocky at the beginning but quickly fell into place. While some people today express their frustration with government bureaucracy, delays in payment, disability assessments and levels of compensation, on the whole it would appear that Quebec society has accepted this universal no-fault system.
So why are we in the news with the present government expressing its intention to make changes to the program? It ends up that a small proportion of innocent accident victims are increasingly upset over the fact that road criminals also benefit from the system. In fact, people who get behind the wheel drunk or drive dangerously, are committing criminal acts and the feeling is they should not be compensated if injured and should be open to lawsuits from the people they did hurt.
This movement took on momentum when the son of Lise Lapointe (wife of former premier Jacques Parizeau) was unfortunately injured by the driver of a farm combine who was convicted of criminal negligence. Justice Minister Marc Bellemare who had represented accident victims as a defense lawyer campaigned in the last election to effect three changes to the automobile insurance act:
Suspend any payments to injured drivers who are convicted of criminal acts;
Permit innocent victims to sue the criminal driver in civil court for damages in excess to those paid for by the government plan; and
Allow the government to recoup from the offender all sums paid to innocent victims.
At first public opinion seemed to go along with these changes, as it does appear irresponsible to compensate criminals for consequences of their own actions. However, many people are wary of what could happen if an exception is made to allow for some tort to be reestablished into the system. A survey held in March of this year by the Canadian Automobile Association (CAA) of Quebec confirms that when people are made aware of the possible consequences of such actions, support for such a proposal drops from 64% to 34%. This result parallels a similar findings of an IBC poll taken earlier in the year. Consumers from taxi drivers to truck drivers to ordinary commuters are worried about how all this would play out within their own families and workplace should one of their members be convicted of a criminal charge and if these changes will affect private insurance premiums.
With all this in mind the government has recently decided to postpone any amendments to the automobile act so they can give the matter more consideration. The government has further indicated that they will strike a special committee in the fall to hear all views on the matter.
In the meantime, victims’ groups are pressuring the government to honor its election promise while opponents to the change point out that government insurance should not substitute itself for the justice system. It will certainly be interesting to follow how this debate unfolds – especially since it has been reported that the proposed changes would only result in 200 lawsuits a year.