Tiinnipeg, F'lanit0ba Septet,T3er 1977 the Politics of AUTOMOBILE INSURANCE
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THE UNIVERSITY ÛF I.IANiTSBA TIIE POLITICS OF AUTOMÛ¡ILE iNSI.JRANCE: A CASE SÏUDY A TI.iE5I5 SUBf.IiTTED TO THE DEPARTPIENT OF POLITICAL STUDIEs BY JOY Í"IARGARET KATHLEEN COOPER tiINNiPEG, f'lANIT0BA SEpTEt,t3ER 1977 THE POLiTICS OF AUTOMOBILE INSURANCE: A CASE STUDY BY JOY I4ARGARET KATHLEEN COOPER A tlissert¡¡tion subllritted to the Faculty of Graduatc Stutlies of the University of Munitob:l in purtiul fulfillmcnt ol'the roquircments of thr' dcgrce ol MASTER OF ARTS o'1977 Per¡¡lission tlus lrecn grantcd to thc LIBRARY OF'l'llU t,NlVUR' SITY O[j M/\NITOIìA to tcnd or scll copics of this dissertiltiotr, ttt thc NATIONAL LIBRARY Ot' (:ANAI)A to ¡l¡icrotilm tlris dissertltiort it¡td to lencl <lr scll copics of tfte l'ilnr, and UNIVDRS¡TY MICROFILMS to publish it¡t ubstruct of this dissert¿¡tion. The :rutftor reservcs other ¡ltrblicatitln rights, ancl neitlrcr thr,' dissert:-rtiolt ltor extcnsivc cxtrltcts front it nray be printetl or otl¡er- wise reprotlrrccd without thc uuthor's writtclt ¡rcrtttission. T/.(BLE tjí [0NTF.NTS PREFACE . e iii Chapter T INTRO]]UCTIO;! IT THE OPERATION AND REGULATION OF AUTOMÛBILE INSURANCE IN MANITOBA 1970 . 13 III THIISSUIS . 33 IV THI Nt\r DEM0CRATIC FARTY STAND 91 V TI-IE LEGISLATIVT PROCEsS 1D6 VI lHE MIÐIA 172 VII ïHE BTLL 56 CAMPAiGNS; Tl'iE INDUSIRY VIRSUS THE G0VERNMINT . 1BB VI I1 C TNCLLJS I ON 232 :.4 !tq.üç-E This pape¡ is essentiaJ..Iy e case-study of how interest gtoups attempt to influence the public policy-making orocess in canada. The focus of the study is the automobile insurance industryr s efforts to prevent the passage of Iegislation enabling the Manitoba I'Jew llemocratic Party govefnment to implement a compul- sory public automobile insurance pJ-an. Introduced by the Government in the first year of their first te¡m of office, the auto insurance -ì-egislation sparked perhaps the fiercest public debate seen in Manitoba for decades. The public controversy, it is argued, was for the most part genelated by the private insurance industry which had a substantia.L economic interest in preserving the s!a'Lug ouo. The industry mounted e massive public campaign against the biLl. but were ultimateÌy unsuccessful in thei¡ efforts. Despite the N.D.P.ts precarious minority position in the Legislature, the Government refused to make any major concessions end managed to pilot the legislation through the House. The ltlanitoba aut,o insursnce issue then represenis a deperture from the typical pattern of gove¡nment relations with rnajor economic interest grouPs as described i.n the existing literatu¡e. The Latter emphasises the accommodative natu¡e of relations betrveen government and major economic j.nte¡est groups on matters affecting the grouprs interests. A major factor explaining thi-s phenomenon, analysts have argued, is that the Canadian political system is extrenreLy responsive to eliteso and that those interest grcups which command this kind of t { access are those which rep:esent elite segments of Canadien society. I ¡ ma.ior groups ata an I Robert Presthus furthe¡ contends that ínterest I ì I integraJ. part, of the Canadian poÌiticaJ- elite, al-ong with Legis- I I l and whiclr .t lators and senior civ-i-l servants, it is this el-ite r! determines pubJ.ic policy" rT .t The paper shows that the private auto insu.rance industry had always enjoyed this kind of accommocjation from governments both federal and provincial, and had in fact played a key rol.e in the shaping of public pclicy respecting automobile insurance¡ In Manitoba in 1970, this ¡elationship clearly.broke down. it is demonstrated, howevel, that the behaviour of the industry did conform genereÌly to u¡hat the theory of elite accommodatien would lead one to expect, and it was the N.D.P. Government which u¡as unwil-ling to bargain t¡ith the industry in the traditional- manne¡. The theory of elite accommodation does not apply, it is submitted, Þecause the N.D.P. Governrnent r¡;as atypical of Presthus r poJ.i-tical elite and was not wiLling to comprornise their strcng and historical- commitment to public automobife insu¡ance to satisfy the dernands of a powerfuJ. interest group. Lv CHAPTTR I. INTRODUCTION 0n August 1 3t,h, 197O, the i{anitoba Legis-lature passed Bil-l- 56, the AutomobiÌe Insurance Act. Essential-ly enab j-i.ng J.egislation, the bil-l affowed the New Democ¡atic Party government to proceed with the establ-istrn¡ent of a Crown corporation to set up and ed- minister a compulsory public automobil-e insurance pian. 'cühil-e similar legislation had been enacted in Saskatchewan l-ess than fifteen years previously vrith barely a sti¡, the P'lanitoba pian was the centre of a bitter and intense public ccntroversy: one writer has characterized the struggJ-e over Bill 56 as arrclassic con- 1 f::ontation . betrveen sccial-ism and indust¡ial- capitalismrr. Throughout the spring and summer of 1970, the battÌe over publ-ic automobil-e insu¡ance raEed in ihe Legislature, in the newspaperst on radio and tel-evision and even in the streets, where car owners decl-ared their alJ-egiances with bumper stickers and simi.l-ar p araphernaLia. The opponents of the government pJ-an argued that it was a product of the ideological- dogmatisrn of a social-ist party; the NDP claimed that this ventu¡e into pubJ-ic otvnership was prompted by and justified by it-s practicaJ- merits. Howevet, the question of whethe:: thg public scherne was correct, reasonable or otherwise justif iable is not within the scope of this paper: the pr-.i.mary I 'Douglas Marshal,L, "How Manitoba Turned 100 by Standing on Its Headrr, MacLeants, December 1970, p. 32. PU¡Pose is to describe how groups rvith a di¡ec¿ economic interest in pubJ'ic a issue attempted to protect. those interests and to inf-Luence the pub-l-ic poJ-icy-making p¡ocess. Hopef uJ-ry, this case study wiJ-J- contribute to some extent ta a greater understa¡cing of the way in which inte¡est groups operate in the poriticar .canadian system. The interest g¡oups primerily affected by the government autonlobil-e insurance pÌan we¡e the insurance industry and automobil-e insu¡ance agents. It was the activities of t,hese two groups , particularÌy the industry, which mace Bi-l,l 56 the subject of perhaps the fie¡cest public debate that Manitoba had seen in decades. Auto- mobil-e insurance, it is submitted, is hardJ_y a funcamentar aspect of human life. In cont¡ast to such basic needs as adequate food, shelte¡ and heaith ca¡e, one woul-d think it wouf ci be a re.l_ativery ninor concern to the average citizen, certainly not one which wou_l_d kindle the intense emotional-ism which characterized the issue in Manitoba. Yet in reading the description of the debete in the foÌlowing pages (in particuLar, Chaoter V) one wc,uLd think that automobi-l-e insurance was a matte¡ of Lif e o¡ cieaih. l,lhil_e it i s impossibJ-e to know exactJ-y hor¡¡ Biil 56 woul_d have been treated, what public reaction might have been, if the insu¡ance inciustry hac not campaigned against the bil-l-, i', seems cLea¡ that it never wou-l_d have generated the kind of feer.ings it did i; the absence of pressure group activity. The experience of saskatchewan, where an essenEia]i.y simir-ar pÌan was estabLished in 1946 by the co-operative comnonwear_th Fed- e¡ation Government, seems tc suppcrt this contentìon. The 3 insui'ance industry did not rnount a vigcrous campaigrr aqainst the saskatchewan pJ-an and it was impl-emer,tecJ with ¡eÌativery rittr_e controversy. As one saskatcrrewan write¡ ( ancr an avowed opponent r'Ihe of the ccF) commented: peopr-e of saskatchewan acceptec compuJ-sory auto insu¡ance without much grurnbr-ing or concernr,. He went on to say that the government was abr"e to impJ-ement such rr pubJ-ic schemes because ... they were concerned only with special groups 2 and situationsr', and thus rpassed into r-aw virtual-ly unnoticed by the pubJ-ic at J.argeil. liou.'ever, r the industry s r-ack of organised opposition to t,he saskatcheu¡an scheme is interesting not only because it underr_ines pJ-ayed the role by the industry in fanning the fl_arnes around Bil-l- 56, but al-so because it can tell- us much about the motivation of the industry's campaign in Manitoba. The industry c-raimed that, opposed it Bill.56 not onJ-y, or even mairrJ-y, because of the econ- omic threat to the industry itself, but because it was a threat to the basic de¡noc¡atic var-ues of ou¡ society. Its rhetoric in opposing Bil-l 56 focussed on its arleged implications with regard to such values as individuar- freedom and free enterprise. sureJ.y, these were equatJ-y at stake with the Saskatchewan plan. The difference, it is suggested, is that in saskatchewan the industry haci re-l-ati¡elv Littr-e to -r-ose by a pubric automcbir-e insurance pIan. Not more than ten per cent of car owners were even ZRobrrt Tyre. DouqÌas in Saskatchewan, (Vancouver: Hitchell- Press, 1962), p. 9. 4 partiaJ-1y insured l¡ef ore the governmeni plan was int,roduced.3 In i\4anitoba in '1 970 automobil"e insurance was big business, as Chapter II demonstrates. Mc¡st cars we¡e insu¡'ed anC private companies we¡e transacting about $35 million in premiums annually.