This is a an explanation of how elected officials, who pay no price for being wrong, can ruin democracy and free enterprise with their self serving, anti-citizen interference in the economy and our lives.

One government body, occupied by socialist minded politicians, decided to take on and take over the private insurance auto industry in their jurisdiction.  They reasoned that automobile insurance was too expensive, and that they could create a fairer system than free market competition and at the same time create benefits for their party, the hidden benefits to them which I will explain. 

Insurance is a business in it simplest terms of charging drivers for vehicle insurance and should an accident occur pay to repair the damage to the owner's vehicle, and if the owner was at vault, pay to repair the other drivers vehicle, as well as any personal injury claims, which they try to cap.  There are various incentives based on age to reduce (or increase premiums for new drivers) accident free driving, no driving infractions and so on.  In a private system, the highly competitive nature of insurance means rate shopping can get a better deal.

If you notice, the things that affect the cost of insurance are accidents, inexperienced drivers who cause more accidents, people who drive outside the established rules and get speeding tickets, drive recklessly, drink and drive and so on.  All of which may result in claims against the automobile policies.  Accidents and injury claims cost insurers money, which directly affects their rates.

One obvious solution to making insurance coverage profitable is to simply eliminate claims.  Which was the basis of the socialist scheme.  They correctly reasoned that if they were to pass a law, all the while couching the scheme as a plan to save the public money and provide safer roads, that suspended all of the drivers that may cause claims, for as long as possible, it would make their scheme initially look cheaper than private insurance. 

Of course they could have created these changes to the market for private insurers and negotiated with the private sector to lower rates.  But if you want to sell a scheme, you hide a lot of the facts.

In any case, the jurisdiction launched the scheme, suspended a ton of drivers, and for a while it looked cheaper, and they took away a lot of the coverage options private insurers offered.  Now here is where one of the the hidden parts of the scheme kicked in.  They staffed the head office and the claims centers with government employees, paid them more than market wages, curbed operating hours, and gave them generous Union and government wage protection, as part of a scheme to ensure the employees of the scheme voted for socialist anti-conservative regulation. After all, its your money they are spending, not their own so they could care less about profit and loss and more about creating beholden constituents that will vote them in again.

Over time, the scheme proved to be far more expensive than promised, once everyone could drive again. To try and keep rates down they created a graduated driver licensing scheme which added additional cost to overall vehicle insurance.  Getting points for tickets and accidents was added to the drivers license side of the scheme, and it took a number of years for the increased license costs to go down, as a so called penalty for being a bad driver.  It was really coverage double dipping. 

All of these actions could have been taken to provide private insurers with incentives and support mechanisms to lower rates, but of course that would not create beholden civil servants who would vote for socialistic policies. I know this was the plan because an EA who was conservative, but working for the socialist showed me the documents that designed this scheme. 

Now here is the real shocker for conservatives. Years later when the socialist leaders that cooked up the scheme were defeated in an election, the conservative government that came in replaced the board of the "public" insurer with so called conservatives and supporters of the new administration.  I know the leaders of both sides of the deal, but did the conservatives dismantle the scheme?  Hell no.  Did they invite private insurers to compete and take advantage of the cost curtailing measures?  Hell no. They just lined their own pockets.  Got it? 

The lesson is simply this, bureaucrats and socialists will do anything to protect their jobs and power, and so called conservatives, unless they have massive personal integrity, will feed at the trough too.