Megapolis Insurance

It’s a debate that Americans have been having for over thirty years – but increasingly, it’s a bone of contention north of the border as well. Does government-run insurance mean less affordable car insurance for Canadian drivers? Should all insurance be left to the private sector? Or is the answer more complicated that a simple “yes” or “no”?

Price Controls Or Monopoly?

Unlike primary care medical services, when it comes to car insurance, Canada isn’t all  socialized or government run. However, in four provinces – British Columbia, Saskatchewan, Manitoba and Quebec – Canadian car insurance is run by what amounts to a government monopoly. According to a recent study by the Fraser Institute,  this has resulted in lower quality of coverage and a higher auto insurance price for motorists in those provinces, at least when it comes to private vehicle coverage.

The Fraser Institute is a Canadian public policy research organization, similar to the Ayn Rand Institute in the U.S.; the focus of the study is how government run services compare to those provided by the private sector, and how these affect individual consumers. The recently-released report, entitled “Comparison of International Auto Insurance Markets,” compared car insurance markets for both the U.S. and Canada in terms of auto insurance policy pricing, fairness in business dealings and claim settlements, consumer choice and the effect of government regulation.

By these indicators, Manitoba and British Columbia ranked dead last. At the top of the list were three American states: Wyoming, Iowa and Illinois.

So – All Government-Run Insurance is Bad?

Those who argue against public health care might find fodder in the Fraser Institute study – which incidentally, was based on data gathered between 2003 and 2005. However, when it comes to auto coverage, which falls under property and casualty, and medical care for human beings, there is a substantial difference. Furthermore, since driving is practically a necessity for most people in the U.S. (and a substantial number of people in Canada as well), there may be times at which some type of government intervention is necessary.

One case in point is Quebec. Although Canada’s Francophone province scored low in the study, it was not at the bottom. Why? Because, as the study acknowledges, the provincial government in Quebec is limited to providing only basic liability auto insurance. For additional coverage, such as collision or loss due to theft or vandalism, consumers must still go to a private insurer. (It’s the same with Canadian health care, incidentally; citizens enjoy basic, primary medical services virtually free as a right of citizenship, but elective surgery such as cosmetic procedures are not covered by the government-run program.)

We feel there is a place for both the private market as well as government programs in a well-run society in which the needs of all – not just those who can afford it – are met. Beyond those basic needs, there is always room for entrepreneurs who want to take advantage of such opportunities and provide those extra services for those who are willing to pay for them.

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