The highest auto insurance rates in Canada are in provinces where insurance is government owned, according to a Fraser Institute study released today.
Besides B.C., Saskatchewan and Manitoba also recorded higher than average rates, the study concludes.
The average auto insurance premium in B.C. in 2009 was $1,113, the study shows.
Ontario, which has private insurance, had the highest average premium at $1,281, while the lowest average premium, $642, was found in Quebec, where auto insurance is government-owned and operated.
Neil Mohindra, director of the Fraser Institute’s Centre for Financial Policy Studies, said: “These results are consistent with previous reports that suggest government-run auto insurance monopolies are less efficient than auto insurance provided by a regulated, competitive market.”
The study also pointed to evidence that taxpayers, including non-drivers, are subsidizing government auto insurers in some provinces. Quebec was among the worst in this regard, having accumulated a deficit of $2.6 billion by 2009, a cost equal to $417 per adult resident of Quebec.
In B.C., taxpayers help fund the Insurance Corporation of British Columbia through an infrastructure-spending program.
“As long as the private-sector insurance industry is open to competition and consumer choice is protected, the portion of auto insurance premiums that are earned as profits cannot result from excessive prices, but instead come from cost efficiencies achieved by successful claims management, pricing strategies, customer service, and good business management,” Mohindra said.
“Drivers in B.C., Saskatchewan, and Manitoba should be asking why their governments have eliminated consumer choice and are forcing them to purchase auto insurance at rates higher than necessary.”
Jennifer Harrison
@JHarrisonBIV