The Fraser Institute: Public Auto Insurance Leaves Quebec Drivers With High Rates and Limited Choice

Quebec drivers are confronted with limited choice, uncompetitive rates, and a highly regulated market when it comes to auto insurance, according to a new study released today by the Fraser Institute, Canada’s leading public policy think-tank.

“Quebec, along with 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 was 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.

Like Manitoba, Saskatchewan, and British Columbia, Quebec is dominated by a government-run auto insurance monopoly. 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.

In terms of overall market performance, Canadian provinces hold down seven of the bottom 10 rankings for 2005. Quebec is ranked 53rd overall out of 60. Saskatchewan has the worst overall score, ranking 60th, followed by Manitoba (59th), then British Columbia (58th), Ontario (57th), New Brunswick (56th), Nova Scotia (55th), and New Jersey (54th).

Alberta was the best-performing province at 44th overall. The best performing jurisdictions overall were Ohio, Iowa, Indiana, Wyoming, and Illinois.

Cost and Pricing Fairness

When comparing the cost and pricing fairness of auto insurance, Canadian provinces occupied five of the bottom 10 spots in 2005. Quebec ranks 52nd. Manitoba has the worst ranking, 60th out of 60. British Columbia (59th) came next, then Saskatchewan (58th), followed by Ontario (53rd). Alberta was the highest ranked province at 13th, followed by Nova Scotia (31st). Top ranked jurisdictions were Wyoming, Illinois, Iowa, Nebraska, and Ohio.

On the remaining three indices, Quebec ranked 51st in 2005 for consumer choice, 20th for business climate, and 51st for regulatory severity.

Manitoba, Saskatchewan, and British Columbia-the other jurisdictions with public auto insurance-held down the bottom three positions on all of these indices while U.S. states held the top positions.

“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.

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The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 80 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute’s independence, it does not accept grants from governments or contracts for research. Visit

Contacts: The Fraser Institute – Media Contact Brett J. Skinner Director, Insurance Policy Studies (604) 688-0221 ext. 552 [email protected] The Fraser Institute Dean Pelkey Director of Communications (604) 714-4582 [email protected]

SOURCE: The Fraser Institute