Hostname: page-component-cd9895bd7-gbm5v Total loading time: 0 Render date: 2024-12-27T13:45:55.682Z Has data issue: false hasContentIssue false
  • English
  • Français

Loss Imposition and Institutional Characteristics: Learning from Automobile Insurance Reform in North America

Published online by Cambridge University Press:  10 November 2009

Edward L. Lascher Jr.
Edward L. Lascher Jr.
Affiliation:
California State University, Sacramento
Get access Rights & Permissions [Opens in a new window]

Abstract

This article reconsiders findings that emphasize the importance of governments' abilities to impose losses on powerful groups, while arguing that loss imposition is more problematic under separation of powers systems. The author argues that empirical evidence to this effect is thin, that more leverage can be obtained by comparing the policy decisions of subnational jurisdictions in the United States and Canada and that automobile insurance reform is an especially appropriate issue to study. Drawing on both aggregate analysis and case studies, the author presents findings suggesting that the Westminster-style parliamentary system in Canada indeed makes loss imposition easier than does the separation of powers system in the United States.

Résumé

Cet article examine à nouveau les conclusions qui insistent sur l'importance que revêt l'aptitude des gouvernements à infliger des pertes aux groupes puissants, tout en affirmant que l'imposition des pertes est plus problématique dans lecadre d'un système de répartition des pouvoirs. L'auteur suggère que les preuves empiriques pour appuyer cette conclusion sont toutefois plutôt minces. Il soutient que l'on a davantage de prise en comparant les décisions politiques d'instances infranationales aux États-Unis et au Canada. La réforme de l'assurance-automobile est un cas qui se prête particuliàrement bien à cette étude. En s'appuyant sur une analyse globale et sur des études de cas, l'auteur soutient que le système parlementaire de type britannique qui se caractérise le fonctionnetnent politique des provinces canadiennes semble rendre l'imposition des pertes plus faciles que le système de séparation des pouvoirs propre aux Etats américains.

Type
Research Article
Information
Canadian Journal of Political Science/Revue canadienne de science politique , Volume 31 , Issue 1 , March 1998 , pp. 143 - 164
Copyright
Copyright © Canadian Political Science Association (l'Association canadienne de science politique) and/et la Société québécoise de science politique 1998

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

1 Weaver, R. Kent and Rockman, Bert A., eds., Do Institutions Matter? Government Capabilities in the United States and Abroad (Washington: The Brookings Institution, 1993)Google Scholar. The authors include loss imposition in a list of 10 capabilities that governments need for effective performance. Some people might quarrel with their list and question the normative basis from which the specific capabilities are derived (see especially Quirk, Paul J., “Do Institutions Matter?” book review, Journal of Politics 56 [1994], 1175–1177)CrossRefGoogle Scholar. Further analysis of this kind is beyond the scope of this article; I would simply contend that there is a sufficient prima facie case for the importance of loss imposition to justify additional empirical study.

2 R. Kent Weaver and Bert A. Rockman, “When and How Do Institutions Matter?” in Do Institutions Matter? 445–61. See also Paul D. Pierson and R. Kent Weaver, “Imposing Losses in Pension Policy,” in ibid., 110–50. Both sets of authors stress that the advantages of concentrated power under a parliamentary system may be offset in part by enhanced accountability (causing decision makers to be more nervous about changes that hurt interest groups). However, Weaver and Rockman state that the first factor “is probably stronger on average” (455).

3 There is some ambiguity about which interpretation is intended by Weaver and Rockman themselves. They often refer to the “contingent” effects of the government system variable, suggesting they are stressing interaction effects. At other times, they seem to argue simply that other factors commonly have a greater impact on relevant dependent variables than the government system variable (see, for example, their discussion of election proximity in “Imposing Losses in Pension Policy,” 455).

4 King, Gary, Keohane, Robert O. and Verba, Sidney, Designing Social Inquiry: Scientific Inference in Qualitative Research (Princeton: Princeton University Press, 1994).Google Scholar

5 Ibid.

6 Pierson and Weaver, “Imposing Losses in Pension Policy.”

7 King, Keohane and Verba, Designing Social Inquiry.

8 Additionally, the District of Columbia in the US operates in many ways like a state, and Yukon and the Northwest Territories in Canada function much like provinces. I ignore these jurisdictions for purposes of this present study, however.

9 For general comparisons of subnational legislatures in the two countries, see especially Moncrief, Gary F., “Contrasting the American and Canadian Subnational Legislatures,” Canadian Parliamentary Review (Autumn 1990), 15–17Google Scholar; and Moncrief, Gary F., “Professionalization and Careerism in Canadian Provincial Assemblies: Comparison to U.S. State Legislatures,” Legislative Studies Quarterly 19 (1994), 33–47.CrossRefGoogle Scholar

10 White, Graham and Levy, Gary, “Introduction: The Comparative Analysis of Canadian Provincial and Territorial Legislative Assemblies,” in White, Graham and Levy, Gary, eds., Provincial and Territorial Legislatures in Canada (Toronto: The University of Toronto Press, 1989), 1–12.Google Scholar

11 In fact, some empirical evidence suggests that even differences in values commonly assumed to separate Americans and Canadians, such as those of distinctive attachments to equality and individualism, may actually be overstated. See Sniderman, Paul M., Fletcher, Joseph F., Russell, Peter H. and Tetlock, Philip E., The Clash of Rights: Liberty, Equality, and Legitimacy in Pluralist Democracy (New Haven: Yale University Press, 1996).Google Scholar

12 Under the McCarran-Ferguson Act, the US Congress specifically exempted “the business of insurance” from federal regulation to the extent that the industry is regulated by the states. According to Macey, Jonathan R. and Miller, Geoffrey P. (Costly Policies: State Regulation and Antitrust Exemption in Insurance Markets [Washington: The AEI Press, 1993])Google Scholar, this Act “is unusual—perhaps unique—in the extraordinary degree of deference it displays toward state regulation” (2). In Canada, the national government's role is limited primarily to ensuring the solvency of insurance companies. Provincial officials determine public policy with respect to coverage that must be offered, and engage in any regulation of rates that may occur. See Insurance Bureau of Canada, Facts of the General Insurance Industry in Canada (Toronto: IBC, 1994).Google Scholar

13 A variety of evidence supports the conclusion that both Americans and Canadians are very attached to their automobiles. For example, 1993 data (for the US) and 1992 data (for Canada) shows that 67 per cent of Americans and 66 per cent of Canadians are licensed drivers. For every 100 people there are about 55 passenger cars in the US and 46 in Canada. I am grateful to Robert Burke of the California State Automobile Association for providing me with this information.

14 All Canadian provinces require citizens to hold liability insurance to operate a motor vehicle (Insurance Bureau of Canada, Facts of the General Insurance Industry in Canada). Cummins, J. David and Tennyson, Sharon (“Controlling Automobile Insurance Costs,” Journal of Economic Perspectives 6 [1992], 95–115)CrossRefGoogle Scholar contend that liability insurance is “at least quasi-compulsory in all [US] states” because state laws either require that motorists purchase such insurance or demonstrate proof of their ability to pay claims following an accident (95).

15 See Joost, Robert H., Automobile Insurance and No-Fault Law (2nd ed.; Deerfield, III.: Clark, Boardman, Callaghan, 1992).Google Scholar

16 Lascher, Edward L. Jr., “But Will It Work? Stories, Institutions, and Automobile Insurance Reform in North America” (unpublished manuscript, California State University, Sacramento, 1997).Google Scholar

17 In Quebec, the government system covers only bodily injury, while private insurers cover property damage. In the other three provinces the mandatory governmental system pays for both injury and property losses.

18 Lascher, “But Will It Work?”

19 Other policy options that surfaced in both countries included imposing rate caps, tightening regulation and cracking down on uninsured motorists. In Canada, the option of moving to a public insurance system was also sometimes considered. For a more thorough discussion of these options see Lascher, “But Will It Work?”

20 See the appendix for details about this survey.

21 The policy literature on the effects of no-fault insurance is vast. For a particularly thorough analysis of how no-fault may work to lower costs, and the cost implications of different system design characteristics, see Carroll, Stephen J., Kakalik, James S., Pace, Nicholas M. and Adams, John L., No-Fault Approaches to Compensating People Injured in Automobile Accidents (Santa Monica, Calif.: RAND, 1991).Google Scholar

22 Smith, Steven K., DeFrances, Carol J., Langan, Patrick A. and Goerdt, John, “Tort Cases in Large Counties,” U.S. Department of Justice, Bureau of Justice Statistics (04 1995).Google Scholar

23 See especially Miller, Mark C., The High Priests of American Politics: The Role of Lawyers in American Political Institutions (Knoxville: University of Tennessee Press, 1995).Google Scholar

24 See, for example, Berte, Marjorie M., Hit Me—I Need the Money! The Politics of Auto Insurance Reform (San Francisco: Institute for Contemporary Studies, 1991)Google Scholar; Harrington, Scott E., “State Decisions to Limit Tort Liability: An Empirical Analysis of No-Fault Automobile Insurance Laws,” Journal of Risk and Insurance 61 (1994), 276–294CrossRefGoogle Scholar; Meier, Kenneth J., The Political Economy of Regulation: The Case of Insurance (New York: State University of New York Press, 1988)Google Scholar; O'Donnell, Allan, Automobile Insurance in Ontario (Toronto: Butterworths, 1991)Google Scholar; and Spiro, Peter and Mirvish, Daniel, “Whose No-Fault Is It, Anyway?” The Washington Monthly (10 1989), 24–28.Google Scholar

25 See, for example, Carroll et al., No-Fault Approaches to Compensating People; and Weisberg, Herbert J. and Derrig, Richard, “The System Misfired,” Best's Review (12 1992), 37–40, 87.Google Scholar

26 I am grateful to a Journal reviewer for suggesting this means of summarizing the data.

27 O'Donnell, Automobile Insurance in Ontario, 202.

28 Lascher, “But Will It Work?”

29 See especially Kingdon, John W., Agendas, Alternatives, and Public Policies (2nd ed.; New York: HarperCollins, 1995).Google Scholar

30 National Association of Insurance Commissioners (NAIC), Auto Insurance Database Report (Kansas City: NAIC, 1993).Google Scholar

31 See Atkinson, Michael M. and Nigol, Robert A., “Selecting Policy Instruments: Neo-Institutional and Rational Choice Interpretations of Automobile Insurance in Ontario,” this Journal 22 (1989), 107–135Google Scholar; Baetz, Mark C., “Automobile Insurance in Ontario,” Case Study Number G-92–130–01, The Laurier Institute for Business and Economic Studies (Waterloo: Wilfrid Laurier University, 1993)Google Scholar; Devlin, Rose Anne, “Automobile Insurance in Ontario: Public Policy and Private Interests,” Canadian Public Policy 19 (1993), 298–310CrossRefGoogle Scholar; Feldthusen, Bruce, “Prices and Politics: Automobile Insurance Rate Regulation in Ontario,” Canadian Insurance Law Review 1 (1990), 283–309Google Scholar; Monahan, Patrick, Storming the Pink Palace: The NDP in Power: A Cautionary Tale (Toronto: Lester, 1995), chap. 3Google Scholar; O'Donnell, Automobile Insurance in Ontario; and Walkom, Thomas, Rae Days (Toronto: Key Porter, 1994), chap. 5.Google Scholar

32 Motorists living in densely populated urban areas tend to pay more for the same insurance coverage than do other drivers. This is because expected insurance losses are generally higher for urban drivers since roads are more congested in big cities (and hence accidents are more likely) and theft rates are higher.

33 See especially Dyer, James A., “Do Lawyers Vote Differently? A Study of Voting on No-Fault Insurance,” Journal of Politics 38 (1976), 452–456CrossRefGoogle Scholar; and Spiro and Mirvish, “Whose No-Fault Is It, Anyway?”

34 Calculated from Canadian Parliamentary Guide (Toronto: Globe and Mail Publishing, 1989).Google Scholar

35 Calculated from Decision Makers 1993–94 (Providence: Impact Communications, 1993).

36 Squire, Peverill, “Legislative Professionalism and Membership Diversity in State Legislatures,” Legislative Studies Quarterly 17 (1992), 69–79.CrossRefGoogle Scholar

37 On the importance of the Ontario automobile insurance market for Canadian insurance generally, see especially Sutton, Brent, “The Property and Casualty Insurance Industry: Mid-term Prospects and the Challenges Ahead” (Ottawa: Conference Board of Canada, 1991).Google Scholar

38 See Atkinson and Nigol, “Selecting Policy Instruments”; Baetz, “Automobile Insurance in Ontario”; and Feldthusen, “Prices and Politics.”

39 Even before the election, a minority Liberal government moved in the direction of tight regulatory control by announcing support for a freeze on insurance rates.

40 For a more extensive discussion of the reasons for this change of heart, see Lascher, “But Will It Work?”

41 On the other hand, the American separation of powers systems may occasionally allow rank-and-file membership to support reform plans over the objection of their leaders. Elsewhere I argue that this occurred in Pennsylvania (“But Will It Work?”). However, such occurrences appear to be rare.

42 See, for example, Spiro and Mirvish, “Whose No Fault Is It, Anyway?”

43 Harrington uses a multivariate statistical model to analyze reasons for legislative enactment of no-fault in “State Decisions to Limit Tort Liability.” Such an approach was feasible because his aim was to explore differences among the states, rather than to compare the states and Canadian provinces. Additionally, one of the key variables in Harrington's model was average state insurance rates. While the National Association of Insurance Commissioners compiles such information for all American states, I was unable to locate equivalent information for the Canadian provinces (information available from the Insurance Bureau of Canada was much less systematic and complete). I was only able to obtain a rough sense of average provincial premiums by merging data from various sources.

44 Harrington's “State Decisions to Limit Tort Liability” provides some empirical evidence in support of the argument that variance in attorney pressure affects legislative choices.

45 See especially Miller, The High Priests of American Politics.

46 Sources for this information include Statistics Canada and NAIC, Auto Insurance Database Report.

47 Miller, The High Priests of American Politics.

48 Brian E. Owen, president of Western Opinion Research and author of a dissertation on the adoption of a public automobile insurance system in Manitoba.

49 See, for example, Marmor, Theodore R., “Health Care Reform in the United States: Patterns of Fact and Fiction in the Use of Canadian Experience,” American Review of Canadian Studies 23 (1993), 47–64CrossRefGoogle Scholar. On the other hand, Barry G. Rabe argues that it is common for environmental policy ideas to be diffused in both directions across the American-Canadian national boundary (see Rabe, Barry G., Beyond NIMBY: Hazardous Waste Siting in the United States and Canada [Washington: The Brookings Institution, 1994], 26).Google Scholar

50 King etal, Designing Social Inquiry, 113–14.

51 See especially Green, Donald P. and Shapiro, Ian, Pathologies of Rational Choice Theory: A Critique of Applications in Political Science (New Haven: Yale University Press, 1994).Google Scholar

52 I credit a Journal reviewer for prompting me to make this point more clearly.

53 Pierson and Weaver, “Imposing Losses in Pension Policy,” 114–15.