TORONTO, ON—Drivers seeking auto insurance in Manitoba, Saskatchewan, and British Columbia are confronted with limited choice, uncompetitive rates, and some of the most highly regulated markets in all North America, according to a new study released today by the Fraser Institute, Canada’s leading public policy think-tank.
“BC, Saskatchewan, and Manitoba are dominated by government-run auto insurance monopolies that attach social goals to insurance, rather than trying to provide consumers with the best value,” said Brett J. Skinner, Fraser Institute director of insurance policy research and co-author of Auto Insurance Market Quality Index 2010: Comparison of International Auto Insurance Markets
“While supporters of government-run auto insurance claim these programs produce lower costs for drivers, a comparison with other jurisdictions shows public auto insurance is consistently among the worst performers within almost all measures of market quality, including cost and affordability.”
The report, Auto Insurance Market Quality Index 2010: Comparison of International Auto Insurance Markets
, assesses the performance of auto insurance markets in 10 Canadian provinces and 50 U.S. states using data from 2003 to 2005, the most recent years for which complete data were available across all jurisdictions. The study used publicly available data obtained from state government insurance regulators in the U.S., annual reports of public auto insurers in Canada, and data from the Insurance Bureau of Canada. The data focused only on private personal auto insurance – excluding commercial and recreational vehicles.
Using 13 variables, the study measured and compared the performance of auto insurance markets and categorized the results into five indices: cost and pricing fairness, choice, business climate, regulatory severity, and overall market quality.
In terms of overall market performance, Canadian provinces hold down seven of the bottom 10 rankings for 2005, led by Saskatchewan with the worst overall score (60th). Manitoba followed (59th), then British Columbia (58th), Ontario (57th), New Brunswick (56th), Nova Scotia (55th), New Jersey (54th), and Quebec (53rd).
Alberta was the best-performing province at 44th overall. The best performing jurisdictions overall were Ohio, Iowa, Indiana, Wyoming, and Illinois.
Manitoba, Saskatchewan, British Columbia and Quebec are the only markets with public auto insurance. However, the government insurer in Quebec is limited to selling basic insurance while optional coverage is left to the private-sector market. This difference might explain why Quebec scores better than the three other provinces with government-run auto insurance monopolies when compared across all the insurance indices.Cost and Pricing Fairness
When comparing the cost and pricing fairness of auto insurance, Canadian provinces occupied five of the bottom 10 spots, with Manitoba ranked 60th out of 60. British Columbia (59th) came next, then Saskatchewan (58th). Ontario ranked 53rd with Quebec 52nd. Alberta was the highest ranked province at 13th, followed by Nova Scotia (31st). Top ranked jurisdictions were Wyoming, Illinois, Iowa, Nebraska, and Ohio.
Manitoba, Saskatchewan, and British Columbia—all jurisdictions with public auto insurance—also held down the bottom three positions on indices ranking consumer choice, insurance business climate, and regulatory severity.
In all three indices, U.S. states were the top ranked jurisdictions.
“The consistent, poor results and low scores of provinces with public auto insurance programs make it abundantly clear that consumers are not getting the choice or value for dollar that they deserve,” Skinner said.