Monopoly Insurance: Unfair at Any Price

Crown Corporations, Publications, Regulation, Role of Government

Executive Summary

  • Government automobile insurance companies in Manitoba, Saskatchewan, and British Columbia have used data to produce insurance premium comparisons which exaggerate estimates of insurance costs in private-sector provinces.
  • The claim that the cost of auto insurance is lower in provinces where government requires it to be purchased from a government provider is not accurate in the case of Manitoba and British Columbia. In the case of Saskatchewan, the average premium is lower than private-sector provinces.
  • Average premium comparisons mask a number of reasons why prices differ.
  • Claim costs vary greatly by province. Such costs (which include payouts) affect the cost of insurance. With insurance, consumers do indeed get what they pay for.
  • Some private-sector provinces have less expensive average insurance prices than other provinces where government is the main insurer.
  • Insurance policies must reflect risk in order to send signals to drivers about their potentially dangerous behaviour and the relative risk of their age and gender cohort.
  • Governments should end taxes that apply only to insurance products.
  • Consumers should be offered a choice between no-fault or tort insurance.
  • Full competition should be allowed in provinces where it does not now exist. There is no price or product advantage to monopoly-provided insurance.
  • Consumers in search of a fair system of comprehensive auto insurance should demand hat it be competitive, that it reward good drivers and penalize poor ones and that they receive adequate comparative information from agents.

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