The Personal Cost and; Affordability of Auto Insurance in ... · 1 BC, SK, and MB deliver auto insur ance through Crown Cor po ra tions. They are the Insur ance Cor po ra - tion of

Studies in

October 2011

Financial Policy

The Personal Cost and Affordability of

Auto Insurance in Canada 2011 Edition

by Neil Mohindra and M. Emrul Hasan

Key Conclusions

Auto insurance premium costs in provinces with government auto in-surance monopolies tend to be higher than observed in private sector, competitive markets

From 2007 to 2009, auto insurance has been most costly and least af-fordable in British Columbia, Ontario, Manitoba, and Saskatchewan—three of which are provinces with government-run auto insurance monopolies. Auto insurance premiums have been consistently most affordable in Alberta, Newfoundland & Labrador, Nova Scotia, Prince Edward Island, and New Brunswick, where auto insurance is delivered in a regulated, competitive, private-sector insurance market.

In 2009, Ontario was the province with the least affordable auto insur-ance. Regulatory severity and insurance fraud have led to higher claim costs per passenger vehicle.

Of the four provinces that each have a public auto insurer, Quebec has consistently ranked best on insurance costs, and in 2009 had the lowest average auto insurance premium of all the provinces. Two factors con-tribute to this performance: the limitation of the public monopoly to bodily injury claims coverage and less severe regulations than the other three provinces.

Précis

This study com pares the av er age cost and affordability of per sonal pas sen ger au to mo -bile in sur ance pre mi ums in each of the 10 Ca na dian prov inces from 2007 to 2009.Four prov inces have gov ern ment-owned mo nop o lies that sell in sur ance cov er age todriv ers. The other six rely on a reg u lated com pet i tive pri vate sec tor to pro vide auto in -sur ance.

Com par i sons across all 10 prov inces in the years from 2007 to 2009 show thatthe aver age price for auto insur ance pre mi ums was high est in Brit ish Colum bia,Ontario, Man i toba, and Sas katch e wan. Of those prov inces, three have gov ern ment-run auto insur ance monop o lies. The least expen sive aver age pre mium in 2008 was inPrince Edward Island where auto insur ance is deliv ered in a reg u lated, com pet i tive,pri vate-sec tor insur ance mar ket. The least expen sive pre mium in 2007 and 2009 wasin Que bec, which has a gov ern ment-run auto insur ance monop oly but only for bodilyinjury.

The study exam ines why Ontario has rel a tively high aver age pre mi ums and whyQue bec’s aver age pre mi ums are rel a tively low. Ontario has rel a tively severe reg u la -tions, and is expe ri enc ing a sig nif i cant prob lem with insur ance fraud. Que bec has lessoner ous rate reg u la tions and less gen er ous pre scribed ben e fits.

The find ings are gen er ally con sis tent with pre vi ous edi tions of this study (Skin -ner, 2007; Skin ner, 2008) and other pre vi ous research com par ing auto insur ance ininter na tional juris dic tions includ ing all 10 Cana dian prov inces (Skin ner, 2006; Rovereand Skin ner, 2010). All stud ies show that auto insur ance does not tend to be less costlyin juris dic tions that have gov ern ment auto insur ance monop o lies, despite claims to thecon trary.

Fra ser Insti tute 4 www.fraserinstitute.org

ii 4 The Personal Cost and Affordability of Auto Insurance in Canada, 2011 edition 4 October 2011


The Personal Cost and Affordability of Auto Insurance in Canada, 2011 edition 4 October 2011 4 3

Contents

Précis 4 ii

Introduction 4 5

What makes auto insur ance costly in Ontario? 4 10

Que bec’s per for mance 4 15

Pub lic auto insur ance: Costs to tax pay ers 4 17

Con clu sion 4 19

Policy recommendations 4 20

About the data 4 21

Appen dix tables 4 25

Key definitions 4 35

References 4 39

Acknowl edg ment and dis claimer 4 45

About the authors 4 46

Publishing information 4 47

About the Fraser Institute 4 49

Sup port ing the Fra ser In sti tute 4 49

Editorial Advisory Board 4 51


4 4 The Personal Cost and Affordability of Auto Insurance in Canada, 2011 edition 4 October 2011



Intro duc tion

In Can ada, both pri vate and pub lic in sur ers sup ply au to mo bile in sur ance. Pri vate in -sur ers pro vide all the au to mo bile in sur ance sold in six Ca na dian prov inces: Al berta(AB), On tario (ON), New Bruns wick (NB), Nova Sco tia (NS), Prince Ed ward Is land(PE), and New found land & Lab ra dor (NL). Brit ish Co lum bia (BC), Sas katch e wan(SK), and Man i toba (MB) all have gov ern ment-owned au to mo bile in sur ers that have amo nop oly over the pro vi sion of ba sic auto in sur ance and com pete for the sale of op -tional in sur ance cov er age with pri vate com pa nies.1 Que bec (QC) also has a pub lic auto in surer, the Société de l’assurance au to mo bile du Qué bec (SAAQ), which runs a mo -nop oly on ba sic (per sonal in jury2) auto in sur ance, but does not com pete with the pri -vate sec tor for the sale of op tional (prop erty dam age) auto in sur ance cov er age.

Pro po nents of gov ern ment-owned insur ance have long argued that pub lic autoinsur ance can offer driv ers cheaper pre mi ums. This study aims to cal cu late the trueaver age cost and affordability of auto insur ance pre mi ums. Case-by-case com par i sonssuch as those pub lished by groups like the Con sum ers’ Asso ci a tion of Can ada (CAC,2003) and some gov ern ment auto insur ers are not valid reflec tions of actual aver ages,though they are often per ceived as such by the pub lic and media.

This study also exam ines why pre mi ums in Ontario are rel a tively high, why pre -mi ums in Que bec are rel a tively low, and what costs tax pay ers bear for gov ern -ment-run auto insur ers.

Ear lier ver sions of this study have explained that gov ern ment-run auto insur ersdo not pub lish audited data in a for mat nec es sary to allow for a cal cu la tion of aver agepre mi ums in their prov inces that can be eas ily and directly com pared to other prov -inces (Skin ner, 2008). As with pre vi ous ver sions of this study, this has neces si tatedapply ing rea son able assump tions to the data pub lished by auto insur ance author i tieswhere a gov ern ment insur ance monop oly exists. Both pri vate and pub lic insur ers have fol lowed Cana dian Gen er ally Accepted Account ing Prin ci ples (GAAP) in pre par ingtheir finan cial state ments. How ever, the stan dards under Cana dian GAAP are dif fer -ent for pri vate insur ers and gov ern ment enti ties (PSAB, 2011). The prob lem will likelybe addressed later in 2011 when both the gov ern ment-run and pri vate insur ers in Can -ada adopt Inter na tional Finan cial Report ing Stan dards (IFRS).

1 BC, SK, and MB deliver auto insur ance through Crown Cor po ra tions. They are the Insur ance Cor po ra -tion of Brit ish Colum bia (ICBC), Sas katch e wan Auto Fund, and Man i toba Pub lic Insur ance (MPI).

2 Tech ni cal terms are defined in a list at the end of this paper.

Find ings on cost and affordability

Ta ble 1 shows the es ti mated av er age auto in sur ance pre mium in each prov ince for2009, the lat est year for which we have data. Fig ures 1 and 2 show data for 2007through 2009. The com plete meth od ol ogy is de scribed in the sec tions that fol low.Nom i nal com par i sons of auto in sur ance pre mi ums are an ef fec tive way to mea suretheir rel a tive cost. These data are dis played be side cal cu la tions of the cost of auto in -sur ance as a per cent age of pro vin cial gross do mes tic prod uct (GDP) per per son, per -sonal in come (PI) per per son, and per sonal dis pos able in come (PDI) per per son—i.e.,per sonal in come re main ing af ter taxes—in each prov ince. Cost as a per cent age of lo cal GDP con trols for dif fer ences in gen eral price lev els be tween ju ris dic tions that couldskew fair com par i sons of auto in sur ance costs. Com par ing costs as a per cent age of PIand PDI dem on strates the rel a tive affordability of the cost of auto in sur ance across ju -ris dic tions.



Table 1: Estimated average net auto insurance premiums in 2009, byprovince (relative cost and affordability)

Provinces Average netauto insurance

premiums($)

Averagepremium as a percentage of

GDP per person

Averagepremium as a

percentage ofPersonal

Income perperson

Averagepremium as a

percentage of PersonalDisposableIncome per

person

QC 642 1.9% 1.9% 2.5%

PE 695 2.4% 2.3% 2.9%

NB 728 2.3% 2.2% 2.8%

NS 736 2.4% 2.3% 2.8%

NL 749 2.1% 2.3% 2.9%

AB 1,004 2.1% 2.2% 2.7%

MB 1,027 3.0% 3.1% 3.8%

SK 1,049 2.7% 2.9% 3.6%

BC 1,113 3.1% 3.2% 4.0%

ON 1,281 3.3% 3.5% 4.5%

Sources: GISA (2007, 2011); IBC (2009); ICBC (2008, 2009, 2010); MPI (2008, 2009, 2010); MSA ResearchInc. (2011); SAAQ (2008, 2009, 2010, 2011); SGI (2008, 2009, 2010); Statistics Canada (2011a, 2011b);authors’ calculations.



Figure 2: Average Net Earned Premium as a percentage of GDP per person

Source: Authors’ cal cu la tion (see the appen dix for a detailed cal cu la tion).

Fig ure 1: Aver age Net Earned Pre mium from 2007 to 2009


$642

$695

$728

$735

$749

$1,004

$1,027

$1,049

$1,112

$1,281

$1,119

$691

$724

$741

$717

$974

$1,468

$1,266

$1,291

$1,236

$698

$700

$769

$751

$701

$958

$1,211

$1,058

$1,288

$1,228

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600

QC

PE

NB

NS

NL

AB

MB

SK

BC

ON

2007

2008

2009

1.9%

2.1%

2.1%

2.3%

2.4%

2.4%

2.7%

3.0%

3.1%

3.3%

3.2%

1.9%

1.8%

2.3%

2.3%

2.4%

3.1%

4.2%

3.4%

3.0%

2.0%

1.8%

1.8%

2.4%

2.3%

2.5%

2.7%

3.5%

3.4%

2.9%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5%

QC

AB

NL

NB

PE

NS

SK

MB

BC

ON

2007

2008

2009

The relative cost of auto insur ance

4 In a nom i nal com par i son of aver age auto insur ance pre mi ums in Can ada in 2009,three of the four most expen sive were in Brit ish Colum bia, Sas katch e wan, and Man i -toba, which have gov ern ment-run auto insur ance. The real com par i son (aver age netearned pre mium as a per cent of GDP) pro vides the same finding.

4 In both nom i nal and real com par i sons, five of the six prov inces with the least expen -sive pre mi ums from 2007 to 2009 had reg u lated com pet i tive pri vate sec tor mar kets for auto insur ance: Prince Edward Island, New Bruns wick , Nova Sco tia, New found land & Lab ra dor, and Alberta.

4 Ontario had the high est aver age pre mium in 2009.

4 In Que bec, aver age auto insur ance pre mi ums in 2007 and 2009 were the least expen -sive of any prov ince in both nom i nal and real com par i sons.

4 Man i toba had the most expen sive auto insur ance in 2008. The cost of insur ance in theprov ince declined slightly in 2009.3

The relative affordability of auto insur ance

4 Aver age net earned pre mi ums as a per cent age of per sonal income and per sonal dis -pos able income sig nal that auto insur ance pre mi ums were most afford able in Alberta,New found land & Lab ra dor, Nova Sco tia, Prince Edward Island, and New Bruns wickfrom 2007 to 2009.

4 Accord ing to the same mea sures, aver age auto insur ance was least afford able in Brit ish Colum bia, Man i toba, Ontario, and Sas katch e wan.

4 In 2008, Que bec had one of the least afford able auto insur ance pre mi ums among Cana -dian prov inces in a com par i son of aver age net earned pre mium as a per cent age of per -sonal income and per sonal dis pos able income, but its per for mance rebounded in 2009.

4 Fig ures 3 and 4 reveal that for 2007 and 2008 reveal that auto mo bile insur ance is con -sis tently less afford able in Brit ish Colum bia and Man i toba than in the other prov inces.



3 Man i toba’s gov ern ment insurer attrib uted lower prices to an improve ment in its unre al ized gains (losses), which helped it to cover the oper at ing def i cits that it has been accru ing for years (MPI, 2009, 2010).



Figure 4: Average Net Earned Premium as a percentage of PDI per person


Fig ure 3: Average Net Earned Premium as a percentage of PI per person


1.9%

2.2%

2.2%

2.3%

2.3%

2.3%

2.9%

3.1%

3.2%

3.5%

3.3%

2.0%

2.0%

2.3%

2.3%

2.4%

3.5%

4.4%

3.6%

3.3%

2.1%

2.1%

2.1%

2.4%

2.2%

2.5%

3.3%

3.8%

3.7%

3.4%

0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0%

QC

NB

AB

NS

NL

PE

SK

MB

BC

ON

2007

2008

2009

2.5%

2.7%

2.8%

2.8%

2.9%

2.9%

3.6%

3.8%

4.0%

4.5%

4.4%

2.6%

2.9%

2.9%

2.9%

3.0%

4.3%

5.5%

4.6%

4.3%

2.8%

2.8%

3.2%

3.1%

2.8%

3.1%

4.2%

4.8%

4.7%

4.4%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0%

QC

AB

NB

NS

NL

PE

SK

MB

BC

ON

2007

2008

2009

What makes auto insur ance costly in Ontario?

Pre vi ous edi tions of this study have shown that of the mar kets with pri vate in sur ance,On tario is the most ex pen sive. Again in 2009, On tario had the most costly and least af -ford able auto in sur ance. The ex pla na tion for the high cost is higher claim costs perpas sen ger ve hi cle, which is it self a re sult of a num ber of fac tors in clud ing reg u la toryse ver ity and in sur ance fraud.

Between 2004 and 2009, aver age acci dent ben e fits claims costs in Ontarioincreased by 102 per cent (Mack, 2010). In fact, the claims cost per pri vate pas sen gervehi cle (PPV) in Ontario is sig nif i cantly higher than in other prov inces with pri vateauto insur ance (see fig ure 5).



Figure 5: Claim cost per private passenger vehicle (PPV)

Sources: GISA (2007, 2011); authors’ calculation.

$662

$373

$476 $476

$1,028

$745

$627

$358

$430 $484

$1,075

$720 $656

$399

$482 $537

$1,194

$706

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

NL PEI NS NB ON AB

2007

2008

2009

Reg u la tory sever ity in Ontario

The Fra ser In sti tute’s Auto In sur ance Mar ket Qual ity In dex stud ies have shown thatpri vate in sur ers in On tario face se vere reg u la tions in rate set ting re stric tions, man da -tory min i mum li a bil ity and ac ci dent ben e fits laws, min i mum cap i tal re quire ment laws, etc. Rovere and Skin ner (2010) found that On tario was ranked the worst amongstprov inces with pri vate auto in sur ance mar kets in the in dex of reg u la tory se ver ity.4

That 2010 study mea sured the reg u la tory se ver ity in the auto in sur ance in dus try in 60 ju ris dic tions in the United States and Can ada and con cluded that in terms of its reg u -la tory re gime, On tario, along with three prov inces with pub lic mo nop oly auto in sur -ance, has been per form ing poorly. In 2009, these same four prov inces ranked as mostex pen sive for cost and affordability.

The link between reg u la tory sever ity and pre mi ums has been found in a num berof stud ies. The reduc tion of rates for high-risk driv ers by rate reg u la tion encour agesrisk ier driv ing behav ior that increases the fre quency and sever ity of vehi cle col li sions.This tends to com press the pre mi ums col lected against higher claims paid by insur ers.Ulti mately it requires all other pre mi ums to be higher than actuarially nec es sary to cover losses. Insur ance pre mi ums in juris dic tions with stricter rate reg u la tion are oftenhigher than in juris dic tions with less rate reg u la tion (Ten ny son, 1997; Mul lins, 2004).

Rate reg u la tion con trib utes to reg u la tory sever ity and has not been found toresult in lower pre mium prices over time (Cummins et al., 2001; Har ring ton, 2001).Regan et al. (2009) also found that efforts to make insur ance more afford able by reg u -lat ing rates can ulti mately lead to higher insur ance costs. This is because rate reg u la -tion that sup presses insur ance prices until they drop below com pet i tive lev els andpro vides sig nif i cant pre mium sub si dies for some con sum ers can cre ate a vari ety ofincen tive dis tor tions in the mar ket that increase the costs to insur ers, which are ulti -mately passed to con sum ers. Leadbetter et al. (2004) looked into the effects of rate reg -u la tion in Ontario. They ana lyzed data cov er ing six prov inces with pri vate autoinsur ance over the 18-year period from 1984 to 2001. They found that rate reg u la tiondoes make auto insur ance pre mi ums more vol a tile for con sum ers in Ontario com -pared to the other five prov inces, and that pre mium vol a til ity increased fol low ing theintro duc tion of rate reg u la tion in Ontario in 1989.



4 This reg u la tory sever ity index is com piled after tak ing into account param e ters such as reg u la tory pro hi bi -tions or restric tions on com pe ti tion between insur ers, rate fil ing restric tions, com pul sory lia bil ity insur -ance laws, com pul sory acci dent ben e fits laws, com pul sory unin sured motor ist cov er age laws, min i mumprop erty dam age lia bil ity cov er age reg u la tions, min i mum bodily injury lia bil ity cov er age reg u la tions,min i mum acci dent ben e fits cov er age reg u la tions and reg u la tory restric tions on legal rights to assign faultin a motor vehi cle col li sion. To get more insight on the rank ing, please see Rovere and Skin ner, 2010.

Insur ance fraud

In sur ance fraud ac counts for ap prox i mately 15 per cent of costs in curred by pri vate in -sur ers in On tario (On tario, Min is try of Fi nance, 2003). The Ca na dian Co ali tionAgainst In sur ance Fraud (CCAIF) com mis sioned a study in 2003 to mea sure the per -va sive ness of per sonal in jury fraud and con cluded that 33.6 per cent of all ac ci dentben e fits claims and 25.6 per cent of all bodily in jury claims have some el e ment of fraud(Hynes et al., 2003).

These fraud u lent insur ance claims occur fol low ing “staged col li sions” whereinjured indi vid u als apply for insur ance ben e fits. These are com monly orga nizedthrough a chain of ser vice pro vid ers. Crim i nals col lab o rate with dif fer ent ser vice pro -vid ers such as tow truck driv ers, auto body shop own ers, med i cal and reha bil i ta tion



How a staged col li sion works

Staged col li sion is a pre med i tated per sonal injury fraud. In these cases, crim i nals attempt to fake avehi cle acci dent and claim debil i tat ing inju ries in order to get income replace ment and other finan -cial ben e fits from insur ance com pa nies. Below are some of the types of such inci dents:

Drive down: In this type of col li sion, the crim i nal waves a hand or gives some sign to an inno centdriver to pro ceed with a merge or lane change. As the vic tim changes lanes, the crim i nal drives intohis or her car and then denies that he or she gave any such sign.

Swoop and squat: Here a “swoop car,” driven by the crim i nal, sud denly speeds up and cuts off the“squat car,” driven by an inno cent per son or an ally of the crim i nal. The squat car can’t stop in timeand col lides with the swoop car. The pur pose is to cre ate a rel a tively minor “fender bender,” although some times inno cent peo ple are killed on high ways in such inci dents. After the col li sion, the crim i -nals and their allies claim some sort of injury and make an auto insur ance claim.

Side swipe: In busy inter sec tions with dual left or right turn lanes, the crim i nal inten tion ally runs intoa tar get vehi cle even if the vic tim in the inner lane drifts a lit tle into the outer lane.

Seat sales: Here the crim i nal driver sells the pas sen ger a seat or seats in the car for a per cent age of thepas sen gers’ insur ance claim. They then fake a col li sion together, claim the money from the insurer,and share it among themselves.

Imag i nary acci dents: The name is self-explan a tory: no acci dent ever really hap pens in these cases.Crim i nals file a “hit and run” case with the police and fab ri cate the dam age to the only car pres ent.

Source: IBC, 2011c.

clinic own ers, law yers, health care pro fes sion als, etc., to make the claim look true.Within min utes of a staged col li sion, a tow truck driver will arrive, rec om mend aparalegal or law yer to coor di nate the pro cess, and will tow the auto mo bile to a par tic u -lar garage. The law yer will man age the claims pro cess and rec om mend spe cific healthcare pro fes sion als. These dif fer ent ser vice pro vid ers over charge for ser vices or sim plycharge insur ers for ser vices that were never exe cuted. Accord ing to insur ance fraudinves ti ga tors, Toronto is the hub for the orga nized crime rings that carry out thesescams. Inves ti ga tors involved in Pro ject 92, a recent insur ance crime pro ject in



Table 2: Average accidental benefits and coverage in the GTA andnon-GTA area

Accident Benefits Total Coverage

GTA Non-GTA GTA Non-GTA

2005 $30,162 $30,088 $10,994 $8,778

2009 $60,581 $45,899 $17,341 $10,192

2005-2009 % change 100.8% 52.5% 57.7% 16.1%

2008-2009 % change 19.7% 17.9% 17.9% 7.2%

Source: Mack (2010).

Table 3: Rise in medical and rehabilitation costs in Ontario from 2004 to 2009

Coverage Avg. cost perclaim in 2004 ($)

Avg. cost perclaim in 2009 ($)

Change between 2004 and 2009

Supplementary medical 11,317 21,611 91.0%

Dependent care 7,741 18,384 137.5%

Housekeeping 5,247 10,199 94.4%

Assessments 7,033 20,748 195.0%

Attendant care 53,323 28,851 -45.9%*

All med/rehab 25,909 55,867 115.6%

Med/rehab claim cost per car 204.6 471.5 130.5%

*The majority of accidental benefit dollars are spent for medical, examination, and attendant care.Decline in attendant care coverage cost per claim is the result of a 267% increase in the number ofthese claims over the 5-year period, many coming from minor injuries.Source: Mack (2010).

Toronto, say they’ve iden ti fied more than 40 staged car acci dents car ried out by onepar tic u lar crime ring alone (Perkins and Rob ert son, 2010).

Accord ing to indus try esti mates for Ontario, more than $1.3 bil lion in claimspay ments go to peo ple abus ing the auto insur ance sys tem (Perkins and Rob ert son,2010). Insur ance frauds are attrac tive to orga nized crim i nals because of Ontario’s high acci dent ben e fits and cov er age. The Greater Toronto Area (GTA) expe ri enced a 100.8per cent increase in acci dent ben e fits between 2005 and 2009, com pared to an increaseof 52.5 per cent in non-GTA areas (see table 2).

An insur ance com pany high lighted the issue of insur ance fraud at a press con fer -ence in 2010 (Perkins, 2010). Accord ing to news reports, the insur ance com panynoted that the aver age cost of a minor injury claim in Ontario in 2009 was $53,000com pared to $3,698 in Alberta, $5,904 in Nova Sco tia, and $8,400 in PE. Med i cal andreha bil i ta tion costs per pol icy in Ontario increased by 130 per cent between 2004 and2009 (Mack, 2010). At the same time, med i cal and reha bil i ta tion costs for all claimsper policy more than dou bled from $26,000 to $56,000. Table 3 below shows thegrowth and break down of med i cal and reha bil i ta tion costs in Ontario.

Reforms

In No vem ber 2009, On tario’s gov ern ment an nounced a pack age of 41 re forms to au to -mo bile in sur ance that took ef fect as of Sep tem ber 2010. These re forms are ex pected tolower the min i mum cov er age for med i cal and re ha bil i ta tion ben e fits, at ten dant care,de duct ibles, and di rect com pen sa tion.5 The re forms should also re duce On tario’s reg -u la tory severity and re duce the po ten tial fi nan cial gains from fraud. Skin ner (2006)showed that when con sum ers are given a choice, they will of ten pre fer a lower level ofben e fit cov er age in ex change for lower pre mi ums.



5 For a list of these reforms, see Ontario, 2009.

Que bec’s per for mance

Of the four prov inces that each have a pub lic auto in surer, Que bec has con sis tentlyranked best on in sur ance costs, and in 2009 had the low est av er age auto in sur ance pre -mium of all the prov inces. Two fac tors con trib ut ing to this per for mance are the lim i -ta tion of the pub lic mo nop oly to bodily in jury claims cov er age and less se verereg u la tions than the other three prov inces.

Que bec’s auto insur ance mar ket went through exten sive reg u la tory changes in1978 and again in 1992. A pure no-fault sys tem was intro duced for bodily inju ries in1978, which is run by a gov ern ment owned firm, Société de l’assurance auto mo bile duQué bec, or SAAQ. Prop erty dam ages are admin is tered by the pri vate sec tor andSAAQ does not com pete with pri vate insur ers in this mar ket (Dionne, 2001).

The 1978 reform made lia bil ity insur ance, at a min i mum of $50,000, com pul -sory, but upheld peo ple’s right to seek com pen sa tion for prop erty dam ages under thetra di tional lia bil ity regime. In 1978, pri vate insur ers began award ing direct com pen sa -tion to peo ple suf fer ing prop erty dam age. Pre vi ous stud ies con firm that these reformshave had sev eral pos i tive effects in Que bec, includ ing increased pro tec tion of vic tims,con sid er ably shorter wait times for com pen sa tion, lower man age ment costs, and a sig -nif i cant decrease in insur ance pre mi ums (Devlin, 1992; Rous seau-Houle, 1998).

A sec ond fac tor con trib ut ing to Que bec’s per for mance on affordability in thisstudy is its rank ing on reg u la tory sever ity. The Fra ser Insti tute’s Auto Insur ance Mar -ket Qual ity Index has ranked Que bec better on reg u la tory sever ity than the otherprov inces that have a gov ern ment insurer, as well as some prov inces with entirely pri -vate insur ance mar kets, includ ing Ontario and some Atlan tic prov inces. In Que bec, thereg u la tion of pre mium rates is lim ited to pub lish ing and fil ing a rate man ual (Dionne,2001). This is sig nif i cantly less oner ous than the require ments in other prov inces whereinsur ers need to get approval from pro vin cial gov ern ment to change their rates.

Lower man da tory cov er age for both bodily injury and third party lia bil ity forprop erty dam age also con trib ute to Que bec’s rank ing on reg u la tory sever ity. Table 4shows the dif fer ences in man da tory cov er age between Que bec and other prov inces.Que bec has a pure no-fault sys tem for cases of bodily injury, which means that no onehas the right to take legal action against an at-fault driver for pain and suf fer ing oraddi tional med i cal and eco nomic expenses. Com pul sory min i mum third-party lia bil -ity cov er age is lower in Que bec than in other prov inces. In 2009, the com pul sory min i -mum third-party lia bil ity cov er age was $200,000 or higher in every other prov ince; inQue bec, driv ers were required to carry just $50,000 in third party lia bil ity for prop ertydam age, though they could buy more cov er age from the pri vate auto insur ance indus -try if they wished.





Table 4: Differences in mandatory auto insurance coverage across provinces (in 2009)

Minimum thirdparty liability

Medicalpayments

Right to sue Catastrophic injury limits ($)

Controls onhealth care

costs3

BC $200,000 $150,000 Yes 150,000 (Med/rehab) Yes

AB $200,000 $50,0001 Yes n/a No

SK—Tort

$200,000 $23,841(non-catastrophic);

$178,838(catastrophic)

Yes 178,838 (Med/rehab);154,992 (Permanent

impairment)

Yes

SK—No-fault

$200,000 $6,098,358 No (withexceptions)

213,443 (Permanentimpairment)

Yes

MB $200,000 No limit No 4,900 (Personal care);215,000 (Permanent

impairment); 1,000,000(Lifetime)

Yes

ON $200,000 $50,000 (Buy-upoptions available)

Yes (subject tothreshold)

1,000,000 (med/rehab)1,000,000 (attendant care)

Yes

QC $50,000 No limit No Maximums vary (based onage, income level, injury etc.)

Yes

NB $200,000 $50,000 Yes n/a No

NS $500,000 $25,000 Yes n/a No

PEI $200,000 $25,000 Yes n/a No

NL $200,000 $25,0002

(optional)Yes

(subject todeductible)

n/a No

1In Alberta, as part of the $50,000 medical benefits, there are sub-limits on chiropractics ($750), massage therapy ($750),and acupuncture ($250). In addition, Alberta offers physical, psychological, and occupational therapy, as well as griefcounseling on death benefits.2Accident benefit averages are not mandatory in NL and there is a $2,500 deductible for pain and suffering.3Controls on health care costs are based on limits of workers’ compensation or provincial health insurance.Source: AMF, 2010; Alberta, Finance and Enterprise, n.d.; New Brunswick, n.d.; Nova Scotia, 2005; Prince Edward Island, n.d.;Newfoundland & Labrador, 1990, amended 2010; ICBC, 2011; MPI, 2011; Ontario, 2011; SGI, 2007.

Pub lic auto insur ance: Costs to tax pay ers

There is ev i dence that tax pay ers, in clud ing non-driv ers, are sub si diz ing gov ern mentauto in sur ers. Que bec is the worst of fender in this re gard; it has built up an ac cu mu -lated def i cit over time as shown in ta ble 5. The most re cent year in which the SAAQhad pos i tive eq uity was 2001. By 2009, it was rack ing up a def i cit of $2.6 bil lion. Aspub lic en ti ties, gov ern ment auto in sur ers can ul ti mately de fault on their ob li ga tion tobe self-sus tain ing. They can in stead rely on the prov ince to fund their cost over runs,and there fore can carry over such losses with out fully ad just ing pre mi ums in fu tureyears to re cover the costs, or by car ry ing losses for ward over many years. $2.6 bil lionworks out to $417 per adult Que bec res i dent.



Table 5: Accumulated deficits of Quebec

Net Income/Loss1

($ millions)

Accumulateddeficits2

($ millions)

Accumulated deficit per adult resident3

($)

2001 -33.1 -171.4 -29.5

2002 -160.5 32.4 5.5

2003 -348.6 387.6 65.4

2004 -205.4 642.8 107.5

2005 177 468.9 77.7

2006 297.2 171.7 28.2

2007 -230.2 401.9 65.4

2008 -2441.7 2843.6 457.5

2009 217.3 2626.1 417

1Net Income/loss amount comes from the income statement of both SAAQ and FAAQ (Fondsd’assurance automobile du Québec). FAAQ works under the umbrella of SAAQ, but their financialaccounts are separately reported. Negative figure indicates losses in this column.2The accumulated deficit includes both from SAAQ and FAAQ. SAAQ accounts mostly include theoperations from driver licensing and vehicle registration. FAAQ accounts include the auto insurancerelated transactions. Both together give the true performance of public insurer in Quebec. Negativefigure indicates accumulated surplus in this column.3Adult residents are both male and female over 18 years old.Sources: SAAQ (2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009); Statistics Canada (2011b).

In BC, tax pay ers help fund the Insur ance Cor po ra tion of Brit ish Colum biathrough an infra struc ture spend ing pro gram. The prov ince pro vides fund ing for infra -struc ture pro jects through school dis tricts, health author i ties, post-sec ond ary insti tu -tions, Crown agen cies, and min is tries. The cap i tal spend ing on ICBC is directed toboth ICBC’s crit i cal busi ness sys tem and devel op ment of ICBC Prop er ties Ltd (IPL)(Brit ish Colum bia, Min is try of Finance, 2006, 2010). As table 6 shows, fund ing to ICBCfrom pro vin cial tax pay ers from 2002/03 to 2009/10 amounted to $207 mil lion.



Table 6: British Columbia government’s capital spending on theInsur ance Cor po ra tion of Brit ish Colum bia

Year Capital spending($ millions)

2002/03 41

2003/04 26

2004/05 31

2005/06 24

2006/07 22

2007/08 23

2008/09 22

2009/10 18

Sources: British Columbia Ministry of Finance (2006, 2010).

Con clu sion

The re sults of this study sug gest that the cost of pre mi ums in prov inces with gov ern -ment auto in sur ance mo nop o lies tend to be higher than those in prov inces with pri -vate sec tor com pet i tive in sur ance mar kets. The find ings are gen er ally con sis tent withpre vi ous edi tions of this study (Skin ner, 2007, 2008) and other pre vi ous re searchcom par ing auto in sur ance in 60 in ter na tional ju ris dic tions in clud ing all 10 Ca na dian prov inces (Skin ner, 2006; Rovere and Skin ner, 2010). Mul lins (2003, 2004) and Milke(2006, 2007) have also ex am ined av er age auto in sur ance pre mi ums us ing dif fer entmeth ods and have reached sim i lar con clu sions. All of these stud ies show that auto in -sur ance does not tend to be less costly in ju ris dic tions that have gov ern ment auto in -sur ance mo nop o lies, de spite claims to the con trary.

The empir i cal find ing implies that gov ern ment-run auto insur ance is less effi -cient than auto insur ance pro vided by a com pet i tive mar ket. Because cov er age andpric ing deci sions are polit i cized in pub lic insur ance, governments tend to requireexces sive ben e fits cov er age that leads to expen sive pre mi ums. In other words, polit i cal inter ven tion in prov inces with pub lic auto insur ance tends to require that driv ersover-insure them selves. In his 2006 study, Skin ner shows that when con sum ers havethe choice, they will often select a lower level of ben e fit cov er age in exchange for lowerpre mi ums. So, gov ern ment insur ance hurts con sumer choice by inef fi ciently over-sup -ply ing insur ance cov er age. This study also finds adverse impli ca tions for tax pay ersthrough the large accu mu lated def i cit of Que bec’s gov ern ment auto insurer and tax -payer fund ing for ICBC infra struc ture spend ing in Brit ish Colum bia.

It is not true that the pur suit of prof its nec es sar ily leads to higher auto insur ancecosts for con sum ers. As long as the pri vate-sec tor insur ance indus try is open to com -pe ti tion and con sumer choice is pro tected, the por tion of auto insur ance pre mi umsthat are earned as prof its can not result from exces sive prices, but come from cost effi -cien cies achieved by suc cess ful claims man age ment, pric ing strat e gies, cus tomer ser -vice, and good busi ness man age ment. Indi vid ual insur ers develop their own risk rat ing sys tems to price pol i cies, which are approved by pro vin cial reg u la tors.

Pre vi ous ver sions of this study have explained that gov ern ment auto insur ers donot pub lish audited data in a for mat nec es sary to allow for a cal cu la tion of aver age pre -mi ums in their prov inces that can be eas ily and directly com pared to those from otherprov inces (Skin ner, 2008). The prob lem will likely be addressed later this year with therequired adop tion of the Inter na tional Finan cial Report ing Stan dards (IFRS) by bothgov ern ment-run and pri vate insur ers in Can ada. These stan dards will improve com -pa ra bil ity of aver age pre mi ums in the future.



Pol icy rec om men da tions

The ev i dence pre sented in this study re in forces the find ings of pre vi ous re search,which shows that pri vate com pet i tive auto in sur ance mar kets are better able to de liverlower pre mium costs than gov ern ment-run auto in sur ance mo nop o lies. As long aspri vate mar kets are open to com pe ti tion, ap pro pri ately reg u lated, and con sum ers have free dom of choice, we should ex pect to ob serve that they can de liver the low est pos si -ble pre mi ums for any given level of in sur ance ben e fit.

Driv ers in Brit ish Colum bia, Sas katch e wan, and Man i toba should be ask ing whytheir prov inces have elim i nated their choices as con sum ers, and forced them to buyauto insur ance from a costly and unnec es sary gov ern ment-run monop oly. Driv ers inthese prov inces would ben e fit from mov ing to an appro pri ately reg u lated com pet i tivemar ket where auto insur ance is obtained from pri vate sec tor insur ers oper at ing incom pe ti tion with each other.

Que bec tax pay ers should be seek ing account abil ity from that prov ince’s gov ern -ment-run auto insurer for its finances, which this study shows con tinue to be in a seri -ous long-term def i cit.

Ontario has taken pos i tive steps with its auto insur ance mar ket includ ing the2010 reforms that scale back ben e fits and an announce ment of actions to curb autoinsur ance fraud in its 2011 Bud get. Ontario driv ers should be ask ing for fur theractions to improve affordability, such as fur ther reforms to reduce reg u la tory sever ity.

Drivers in prov inces with com pet i tive pri vate sec tor auto insur ance mar ketsshould beware of mis lead ing prom ises regard ing the value of pub lic auto insur ancebecause the evi dence shows that com pet i tive pri vate sec tor mar kets are pro duc ingbetter results for con sum ers.



About the data

Data sources

For the pri vate sec tor in sur ance in dus tries in Al berta, On tario, New Bruns wick, NovaSco tia, Prince Ed ward Is land, and New found land & Lab ra dor, all data used for thisanal y sis come from the Gen eral In sur ance Sta tis ti cal Agency (GISA, 2007, 2011). Alldata on gov ern ment in sur ers are taken di rectly from the an nual re ports of the gov ern -ment auto in sur ers them selves: in Brit ish Co lum bia this is the In sur ance Cor po ra tionof Brit ish Co lum bia (ICBC, 2008, 2009, 2010); in Sas katch e wan it is the Sas katch e wanAuto Fund (SGI, 2008, 2009, 2010, 2011); in Man i toba it is Man i toba Pub lic In sur ance(MPI, 2008, 2009, 2010); and in Que bec it is the Société de l’assurance au to mo bile duQué bec (SAAQ, 2008, 2009, 2010, 2011). Data for all pri vate in sur ers op er at ing in theop tional mar kets in Brit ish Co lum bia, Sas katch e wan, Man i toba, and Que bec comefrom MSA Re search Inc. (2011). The source for gen eral eco nomic and pop u la tion data is Sta tis tics Can ada (2011a, 2011b).

Count ing per sonal pas sen ger auto mo biles only

All data on pri vate sec tor in sur ers in Al berta, On tario, New Bruns wick, Nova Sco tia,Prince Ed ward Is land, and New found land & Lab ra dor used in this study ac count onlyfor per sonal pas sen ger au to mo biles. Reg u la tors in Brit ish Co lum bia, Sas katch e wan,Man i toba, and Que bec do not re quire auto in sur ers (gov ern ment or pri vate) to pub -lish data on per sonal pas sen ger ve hi cles sep a rately from com mer cial or rec re ationalve hi cles. In or der to es ti mate the per cent age of the to tal pre mium fig ures pub lished inBrit ish Co lum bia, Sas katch e wan, Man i toba, and Que bec that in cludes only per sonalpas sen ger au to mo biles, it was nec es sary to ap ply the av er age of the prov inces forwhich actual data exist.

Cal cu lat ing aver ages

To cal cu late av er ages, this study ap plies a sim i lar method to that used in a pre vi ousedi tion of this study (Skin ner, 2008). In or der to ac cu rately cal cu late the av er age costof pre mi ums in a mar ket and make it rea son ably com pa ra ble across ju ris dic tions, the



to tal amount of all pre mi ums must be di vided by a de nom i na tor that is de fined uni -formly across all ju ris dic tions. The ideal di vi sor is the num ber of risk ex po sures. How -ever, the num ber of risk ex po sures is a dif fi cult con cept to de fine sta tis ti cally. Riskex po sures could be de fined as the num ber of in sur ance pol i cies, the num ber of in sured ve hi cles, or the num ber of insured driv ers.

The prob lem with using the num ber of pol i cies to rep re sent risk expo sures isthat juris dic tions with risk pric ing pol i cies that encour age higher rates of per capitavehi cle own er ship will pro duce more insur ance pol i cies than juris dic tions with pol i -cies that encour age lower rates of vehi cle own er ship (Mul lins, 2003, 2004). This couldcre ate a mis lead ingly low aver age pre mium when the num ber of pol i cies is used as adivi sor to cal cu late an aver age across juris dic tions with dis sim i lar pric ing pol i cies.

Pre vi ous edi tions of this study (Skin ner, 2007, 2008) con ducted a brief anal y sis of the ratio of earned vehi cles (i.e., “pol i cies” in BC and Man i toba, and “insured vehi cles”in Sas katch e wan) to total pop u la tion in each juris dic tion to see if the num ber of pub -lished risk expo sures (as defined in each juris dic tion) could be used as a com pa ra bledivi sor for the pur poses of cal cu lat ing an aver age. The anal y sis showed that even afteradjust ing the reported fig ures of the gov ern ment auto insur ers down ward to accountonly for per sonal pas sen ger auto mo biles, the num ber of pol i cies or insured vehi clespub lished by gov ern ment insur ers in those prov inces rep re sented a dra mat i callyhigher per cent age of the total pop u la tion in BC (63%), Man i toba (67%) and Sas katch e -wan (81%) than either the indi vid ual ratios, or the aver age ratio (51%) across the sixprov inces for which audited data was avail able to con firm the num ber of risk expo -sures (Skin ner, 2008).

All six prov inces with pri vate sec tor auto insur ance (Alberta, Ontario, NewBruns wick, Nova Sco tia, Prince Edward Island, and New found land & Lab ra dor) usethe same def i ni tion for cal cu lat ing earned expo sures. The large dif fer ence between the aver age ratios of these six prov inces and the ratios shown for Brit ish Colum bia, Sas -katch e wan, and Man i toba sug gest that the fig ures that gov ern ment insur ers in thoseprov inces pub lish on the num ber of pol i cies or insured vehi cles are not com pa ra blydefined rel a tive to the fig ures shown for the six prov inces that have pri vate sec tor autoinsur ance, or even among their fel low gov ern ment insur ers. To the author’s knowl -edge, there are no pub lished def i ni tions avail able from ICBC, SGI, or MPI for these fig -ures. There is also no data avail able on the num ber of insured driv ers in eachjuris dic tion. The num ber of licensed driv ers is one pos si ble proxy for this. How ever, inOntario and Que bec where a large per cent age of the pro vin cial pop u la tion resides inurban met ro pol i tan areas uniquely served by light rail, sub way, and com mu ter rail sys -tems, there tends to be greater use of mass tran sit sys tems and lower vehi cle own er -ship. There fore, using the num ber of licensed driv ers will inflate the divi sor andarti fi cially deflate pre mi ums in Ontario and Que bec as a result.



The aver age pre mi ums shown here for Brit ish Colum bia, Sas katch e wan, Man i -toba, and Que bec are adjusted for the rea sons stated above, by assum ing that the num -ber of earned risk expo sures in these prov inces is the same as the aver age of the othersix prov inces for which com pa ra ble stan dard ized data is avail able.

MPI uses an unusual fis cal year for report ing data (March 1 to Feb ru ary 28/29each year). There fore, for MPI data, the fis cal year end ing Feb ru ary 29, 2010, cov ers 10months of the year 2009 and 2 months of the year 2010, but is used here for com par i -son to the 2009 fig ures reported by cal en dar year by all other juris dic tions, and by pri -vate insur ers oper at ing in the optional mar ket in Man i toba. The same meth od ol ogy isused for 2007 and 2008 data.

Cal cu lat ing net pre mi ums

Gov ern ment auto in sur ers some times re turn re bates to driv ers ei ther from op er a -tional sur pluses, or in com pli ance with leg is lated di rec tives. These re bates are sub -tracted from the cost of auto in sur ance in this study be cause the re bates re duce theef fec tive cost of auto in sur ance for driv ers.

The data avail able to this study indi cate that gov ern ment-run auto insur ers arti -fi cially deflate pre mi ums in some years by run ning def i cits or com pre hen sive losses.Occa sion ally, prov inces with gov ern ment auto insur ers have even leg is lated rebatesthat have pro duced net total losses on the income state ments of gov ern ment insur ers,or have leg is lated freezes or roll-backs of auto insur ance rates that have pro duced def i -cits in some years, despite nom i nal pro vi sions requir ing gov ern ment insur ers to beself-sus tain ing. As pub lic enti ties, gov ern ment-run auto insur ers can ulti matelydefault on their obli ga tion to be self-sus tain ing and rely on the prov ince to fund oper a -tions that are in a def i cit posi tion and there fore can carry over such losses with out fully adjust ing pre mi ums in future years to recover the costs, or by car ry ing losses for wardover many years. This is evi dent in Que bec where sig nif i cant SAAQ def i cits have accu -mu lated over many years. Other pub lic insur ers like ICBC, MPI, and SGI also havecon sis tent com pre hen sive losses. Although their annual reports reveal that com pre -hen sive losses were not pres ent in 2009, this improve ment came from defer ring somecru cial expenses. This is never a good strat egy where the indus try is fac ing infla tion arypres sure that may cre ate a higher bur den in future years. There fore, this study addsany net total loss (or income for 2009) reported on audited income state ments forSAAQ, MPI, SGI, and ICBC to esti mate the actual cost of auto insur ance pro vided bygov ern ment insur ers within each year. The adjust ment made to the data here isdesigned to pro duce a fair com par i son between prov inces of the actual pre mi umsrequired to fully cover actual costs within each year.



Many insur ers (both pub lic and pri vate) will also sub si dize cur rent pre mi umsfrom returns on invested sur pluses from past years as a com pet i tive strat egy. Pre mium fig ures are not adjusted to account for such sub si dies because they are fully funded inthe cur rent period. In the prov inces with pri vate sec tor insur ance mar kets, pro vin cialgov ern ments require auto insur ers to pay health lev ies for the recov ery of the costs ofpub licly funded med i cal care deliv ered to vic tims of vehi cle col li sions. Nota bly, thesehealth lev ies are not applied to gov ern ment auto insur ers in Que bec, Man i toba, or BC.In order to make fair com par i sons of the direct costs of auto insur ance pre mi ums,these lev ies have been deducted from pre mi ums. The same has been done for SGIAuto Fund as it has con trac tual obli ga tions to pro vide fund ing to Sas katch e wan health orga ni za tions to pro vide for reha bil i ta tive ser vices for those injured in auto mo bile col -li sions.

Finally, var i ous types of taxes (on pre mi ums, sales, and oth ers) are applied toauto insur ance pre mi ums in the prov inces, and these taxes have been removed toallow for a fair com par i son of the direct cost of auto insur ance pre mi ums.



Appen dix tables



Fra ser Insti tute 4 ww

w.fraserinstitute.org

7002 ,ecnarusni elibomotua rotces etavirp htiw secnivorp rof snoitaluclac dna atad esaB :a1 xidneppA

LN EP SN BN NO BA ecnivorp 6desu egarevasetamitse rof

noitalupoP 004,605 002,831 008,539 005,547 009,297,21 007,215,3

selciheV regnessaP etavirP denraE)sVPP( a

715,542 486,77 260,494 970,214 496,613,6 631,750,2

noitalupop % sVPP %05.84 %02.65 %08.25 %03.55 %04.94 %06.85 %5.15

)PDG( tcudorP citsemoD ssorG 000,000,197,91$ 000,000,941,4$ 000,000,116,82$ 000,000,934,32$ 00,000,332,335$0

00,000,800,481$0

nosrep rep PDG 280,93$ 220,03$ 475,03$ 144,13$ 286,14$ 483,25$

)IP( emocni lanosreP 000,000,097,51$ 000,000,029,3$ 000,000,610,92$ 000,000,805,22$ 00,000,150,664$0

00,000,941,061$0

nosrep rep IP 181,13$ 563,82$ 700,13$ 291,03$ 034,63$ 195,54$

)IDP( emocnI elbasopsiD lanosreP 000,000,916,21$ 000,000,511,3$ 000,000,509,22$ 000,000,708,71$ 00,000,370,653$0

00,000,060,221$0

nosrep rep IDP 919,42$ 045,22$ 674,42$ 688,32$ 438,72$ 847,43$

)PE( smuimerP denraE latoT b 870,579,062$ 545,889,17$ 458,661,784$ 344,389,644$ 599,912,365,9$ 274,677,858,2$

ticifed smuimerp dednufnu sulP)ssol latot teN( c

0$ 0$ 0$ 0$ 0$ 0$

derusni ot diap setaber suniMsrevird d

0$ 0$ 0$ 0$ 0$ 0$

PE latot teN 870,579,062$ 545,889,17$ 458,661,784$ 344,389,644$ 599,912,365,9$ 274,677,858,2$

ylno VPP PE e 269,716,912$ 482,039,85$ 936,434,304$ 356,705,053$ 348,378,041,8$ 156,604,411,2$

PE latot % PE VPP %02.48 %09.18 %08.28 %04.87 %01.58 %00.47 %5.28

seivel htlaeH 000,007,5$ 000,009,1$ 000,001,11$ 000,008,91$ 000,003,241$ 000,000,08$

PE VPP no xat muimerp .tsE 84.817,487,8$ 49.955,260,2$ 65.583,731,61$ 95.922,515,01$ 92.512,622,442$ 35.991,234,36$

PE VPP no xat selas .tsE 03.496,249,23$ 00.0$ 00.0$ 00.0$ 00.0$ 00.0$





LN EP SN BN NO BA ecnivorp 6desu egarevasetamitse rof

PE VPP no xat rehto .tsE 0$ 303,985$ 339,240,5$ 770,505,3$ 0$ 0$

sexat dna seivel sunim PE VPP 945,091,271$ 124,873,45$ 023,451,173$ 743,786,613$ 826,743,457,7$ 154,479,079,1$

PE VPP ten gvA 107$ 007$ 157$ 967$ 822,1$ 859$

nosrep rep PDG % PE VPP ten gvA %08.1 %03.2 %05.2 %04.2 %09.2 %08.1

nosrep rep IP % PE VPP ten gvA %02.2 %05.2 %04.2 %05.2 %04.3 %01.2

nosrep rep IDP % PE VPP ten gvA %08.2 %01.3 %01.3 %02.3 %04.4 %08.2

a yb dehsilbup taht ot denifed ylbarapmoc era taht atad troper ton od CB dna ,KS ,BM ,CQ ;ASIG yb deilppus serugif lautca era BA dna ,NO ,BN ,SN ,EP ,LN rof ataDsi atad hcihw rof secnivorp rehto eht fo egareva lanoitroporp eht gniylppa yb detamitse era CB dna ,KS ,BM ,CQ morf atad ,eroferehT .secnivorp xis rehto eht

.dradnats yrotaluger lasrevinu a htiw tnetsisnoc detroperb yna edulcni dna )selcihev lanoitaercer dna ,laicremmoc ,regnessap lanosrep ;srerusni etavirp sulp cilbup ,.e.i( tekram eritne eht revoc smuimerP denraE latoT

.srevird derusni ot degrahc seef ecivres detaler-ecnarusnic .CBCI dna ,IGS ,IPM ,QAAS rof stnemetats emocni detidua ni detroper )emocni( ssol evisneherpmoc ten ,.e.id rehtehw fo sseldrager detalsigel era setaber eseht semitemoS .setaber fo mrof eht ni srevird ot sesulprus raey tnerruc nruter semitemos srerusni tnemnrevoG

.sulprus raey tnerruc a si erehte yb dehsilbup taht ot denifed ylbarapmoc era taht atad troper ton od CB dna ,KS ,BM ,CQ ;ASIG yb deilppus serugif lautca era BA dna ,NO ,BN ,SN ,EP ,LN rof ataD

si atad hcihw rof secnivorp rehto eht fo egareva lanoitroporp eht gniylppa yb detamitse era CB dna ,KS ,BM ,CQ morf atad ,eroferehT .secnivorp xis rehto eht.dradnats yrotaluger lasrevinu a htiw tnetsisnoc detroper

;)b1102 ,a1102( adanaC scitsitatS ;)1102( .cnI hcraeseR ASM ;)8002( QAAS ;)8002( IPM ;)8002( IGS ;)8002( CBCI ;)b1102 ,a1102 ,9002( CBI ;)1102 ,7002( ASIG :secruoS.snoitaluclac s’rohtua


Appendix 1b: Base data and calculations for provinces with public sector automobileinsurance, 2007

QC MBa SK BC

Population 7,687,400 1,193,600 1,000,300 4,309,600

Earned Private Passenger Vehicles(PPVs)b

3,962,291 615,213 515,581 2,221,283

PPVs % population 51.5% 51.5% 51.5% 51.5%

Gross Domestic Product (GDP) $265,585,000,000 $41,263,000,000 $39,626,000,000 $164,496,000,000

GDP per person $34,548 $34,570 $39,614 $38,170

Personal Income (PI) $249,883,000,000 $38,106,000,000 $32,322,000,000 $151,620,000,000

PI per person $32,506 $31,925 $32,312 $35,182

Personal Disposable Income (PDI) $189,804,000,000 $29,973,000,000 $25,403,000,000 $117,596,000,000

PDI per person $24,690 $25,111 $25,395 $27,287

Total Earned Premiums (EP)c $3,430,335,000 $983,598,000 $708,741,000 $3,732,134,000

Plus unfunded premiums deficit (Nettotal loss)d

$230,200,000 $22,232,000 $103,368,000 $203,451,000

Minus reebates paid to insured driverse $0 $62,565,000 $99,308,000 $306,118,000

Net total EP $3,660,535,000 $943,265,000 $712,801,000 $3,629,467,000

EP PPV onlyf $3,018,405,124 $777,797,756 $587,761,677 $2,992,787,063

PPV EP % total EP 82.5% 82.5% 82.5% 82.5%

Health levies $0 $0 $12,966,000 $0

Est. premium tax on PPV EP $101,116,571.65 $23,333,932.68 $29,388,083.86 $131,682,630.75

Est. sales tax on PPV EP $150,920,256.20 $0.00 $0.00 $0.00

Est. other tax on PPV EP $0 $9,722,472 $0 $0

PPV EP minus levies and taxes $2,766,368,296 $744,741,351 $545,407,593 $2,861,104,432

Avg net PPV EP $698 $1,211 $1,058 $1,288

Avg net PPV EP % GDP per person 2.0% 3.5% 2.7% 3.4%

Avg net PPV EP % PI per person 2.1% 3.8% 3.3% 3.7%

Avg net PPV EP % PDI per person 2.8% 4.8% 4.2% 4.7%

aMPI uses an unusual fiscal year for reporting data that covers March 1 to February 28/29 each year; therefore for MPI data, the fiscal yearending February 29, 2008 covers 10 months of the year 2007 and 2 months of the year 2008, but is used here for comparison to the 2007figures reported by calendar year by all other jurisdictions, and by private insurers operating in the optional market in Manitoba.bData for NL, PE, NS, NB, ON, and AB are actual figures supplied by GISA; QC, MB, SK, and BC do not report data that are comparablydefined to that published by the other six provinces. Therefore, data from QC, MB, SK, and BC are estimated by applying the proportionalaverage of the other provinces for which data is reported consistent with a universal regulatory standard.cTotal Earned Premiums cover the entire market (i.e., public plus private insurers; personal passenger, commercial, and recreationalvehicles) and include any insurance-related service fees charged to insured drivers.di.e., net comprehensive loss (income) reported in audited income statements for SAAQ, MPI, SGI, and ICBC.eGovernment insurers sometimes return current year surpluses to drivers in the form of rebates. Sometimes these rebates are legislatedregardless of whether there is a current year surplus.fData for NL, PE, NS, NB, ON, and AB are actual figures supplied by GISA; QC, MB, SK, and BC do not report data that are comparably defined to that published by the other six provinces. Therefore, data from QC, MB, SK, and BC are estimated by applying the proportional averageof the other provinces for which data is reported consistent with a universal regulatory standard.gFunding to Saskatchewan Health Organization to provide for rehab services for those injured in auto accidents—extracted from annualreports.Sources: GISA (2007, 2011); IBC (2009, 2011a, 2011b); ICBC (2008); SGI (2008); MPI (2008); SAAQ (2008); MSA Research Inc. (2011); StatisticsCanada (2011a, 2011b); author’s calculations.





LN EP SN BN NO BA secnivorp 6desu egarevasetamitse rof

noitalupoP 002,605 005,931 007,639 009,647 003,239,21 004,195,3


702,752 013,97 108,405 655,524 249,554,6 422,451,2

noitalupop % sVPP %08.05 %09.65 %09.35 %00.75 %09.94 %00.06 %04.25


00,000,825,681$0

nosrep rep PDG 878,93$ 178,92$ 729,03$ 913,13$ 778,04$ 739,15$

)IP( emocnI lanosreP 000,000,356,51$ 000,000,470,4$ 000,000,490,03$ 000,000,807,32$ 00,000,696,874$0

00,000,902,271$0

nosrep rep IP 329,03$ 402,92$ 821,23$ 247,13$ 610,73$ 059,74$


00,000,949,231$0

nosrep rep IDP 785,42$ 893,32$ 825,52$ 323,52$ 225,82$ 910,73$


ticifed smuimerp dednufnu sulP)ssol latot teN( c

0$ 0$ 0$ 0$ 0$ 0$

derusni ot diap setaber suniMsrevird d

0$ 0$ 0$ 0$ 0$ 0$

PE latot teN 584,765,872$ 982,806,27$ 938,558,194$ 139,042,334$ 686,284,497,9$ 177,396,610,3$

ylno VPP PE e 086,758,432$ 811,373,95$ 478,921,804$ 667,819,143$ 064,891,473,8$ 312,669,942,2$

PE latoT % PE VPP %03.48 %08.18 %00.38 %09.87 %05.58 %06.47 %08.28

seivel htlaeH 000,009,5$ 000,009,1$ 000,008,21$ 000,001,02$ 000,003,241$ 000,000,58$

PE VPP no xat muimerp .tsE 703,493,9 950,870,2 591,523,61 365,752,01 459,522,152 689,894,76

PE VPP no xat selas .tsE 256,822,53 — — — — —






PE VPP no xat rehto .tsE — 137,395 326,101,5 881,914,3 — —

sexat dna seivel sunim PE VPP 127,433,481$ 823,108,45$ 650,309,373$ 510,241,803$ 605,276,089,7$ 722,764,790,2$

PE VPP ten gvA 717$ 196$ 147$ 427$ 632,1$ 479$









;)b1102 ,a1102( adanaC scitsitatS ;)1102( .cnI hcraeseR ASM ;)9002( QAAS ;)9002( IPM ;)9002( IGS ;)9002( CBCI ;)b1102 ,a1102 ,9002( CBI ;)1102 ,7002( ASIG :secruoS.snoitaluclac s’rohtua



QC MBa SK BC

Population 7,751,300 1,205,500 1,013,800 4,383,900

Earned Private Passenger Vehicles (PPVs)b 4,060,887 631,558 531,127 2,296,714

PPVs % population 52.39% 52.39% 52.39% 52.39%


GDP per person $34,627 $34,888 $40,870 $37,608


PI per person $33,550 $33,480 $36,518 $35,855


PDI per person $25,651 $26,558 $29,504 $28,252

Total Earned Premiums (EP)c $3,542,050,000 $1,033,015,000 $746,290,000 $3,883,826,000

Plus unfunded premiums deficit(Net total loss)d

$2,441,700,000 $136,023,000 $132,113,000 $179,304,000

Minus rebates paid to insured driverse $0 -54,000 $68,000 $317,850,000

Net total EP $5,983,750,000 $1,169,092,000 $878,335,000 $3,745,280,000

EP PPV onlyf $4,956,259,465 $968,343,144 $727,513,041 $3,102,164,938

PPV EP % Total EP 82.83% 82.83% 82.83% 82.83%

Health levies h $0 $0 $18,991,000 $0

Est. premium tax on PPV EP 166,034,692 29,050,294 36,375,652 136,495,257

Est. sales tax on PPV EP 247,812,973 0 0 0

Est. other tax on PPV EP 0 12,104,289 0 0


Avg net PPV EP $1,119 $1,468 $1,266 $1,291




aMPI uses an unusual fiscal year for reporting data that covers March 1 to February 28/29 each year; therefore for MPI data, the fiscal yearending February 29, 2009 covers 10 months of the year 2008 and 2 months of the year 2009, but is used here for comparison to the 2008figures reported by calendar year by all other jurisdictions, and by private insurers operating in the optional market in Manitoba.bData for NL, PE, NS, NB, ON, and AB are actual figures supplied by GISA; QC, MB, SK, and BC do not report data that are comparablydefined to that published by the other six provinces. Therefore, data from QC, MB, SK, and BC are estimated by applying the proportionalaverage of the other provinces for which data is reported consistent with a universal regulatory standard.cTotal Earned Premiums cover the entire market (i.e., public plus private insurers; personal passenger, commercial, and recreationalvehicles) and include any insurance-related service fees charged to insured drivers.di.e., net comprehensive loss (income) reported in audited income statements for SAAQ, MPI, SGI, and ICBC.eGovernment insurers sometimes return current year surpluses to drivers in the form of rebates. Sometimes these rebates are legislatedregardless of whether there is a current year surplus.fData for NL, PE, NS, NB, ON, and AB are actual figures supplied by GISA; QC, MB, SK, and BC do not report data that are comparably defined to that published by the other six provinces. Therefore, data from QC, MB, SK, and BC are estimated by applying the proportional averageof the other provinces for which data is reported consistent with a universal regulatory standard.gAt February 29, 2008, the rebate was estimated to be $62,700,000. The amount was actualized during the current fiscal year when$62,646,000 was distributed to Basic policyholders. On December 2, 2008, the Public Utilities Board released its ruling on the corporation’s2009/2010 Basic Insurance rate application. There is no surplus distribution in 2009/2010.hFunding to Saskatchewan Health Organization to provide for rehab services for those injured in auto accidents—extracted from annualreports.Sources: GISA (2007, 2011); IBC (2009, 2011a, 2011b); ICBC (2009); SGI (2009); MPI (2009); SAAQ (2009); MSA Research Inc. (2011); StatisticsCanada (2011a, 2011b); author’s calculations.






noitalupoP 001,805 001,141 001,939 003,947 009,460,31 007,076,3


142,072 977,08 648,315 913,634 678,315,6 075,902,2

noitalupoP % sVPP %02.35 %02.75 %07.45 %02.85 %09.94 %02.06 %06.25


00,000,522,871$0

nosreP reP PDG 066,53$ 115,92$ 708,03$ 411,13$ 299,83$ 355,84$

)IP( emocnI lanosreP 000,000,693,61$ 000,000,302,4$ 000,000,326,03$ 000,000,892,42$ 00,000,146,774$0

00,000,243,171$0

nosreP reP IP 962,23$ 787,92$ 906,23$ 824,23$ 955,63$ 876,64$


00,000,841,531$0

nosreP reP IDP 959,52$ 450,42$ 481,62$ 601,62$ 565,82$ 818,63$


ticifeD smuimerP dednufnU sulP)ssoL latoT teN( c

0$ 0$ 0$ 0$ 0$ 0$

derusnI ot diaP setabeR suniMsrevirD d

0$ 0$ 0$ 0$ 0$ 0$

PE latoT teN 398,768,403$ 855,224,47$ 955,036,794$ 176,265,244$ 159,637,281,01$ 592,984,841,3$

ylnO VPP PE e 584,018,752$ 774,058,06$ 690,223,314$ 307,126,253$ 501,101,747,8$ 692,040,973,2$

PE latoT % PE VPP %06.48 %08.18 %01.38 %07.97 %09.58 %06.57 %03.38

seiveL htlaeH 000,003,6$ 000,000,2$ 000,007,31$ 000,008,02$ 000,003,241$ 000,000,09$

PE VPP no xaT muimerP .tsE 914,213,01 767,921,2 488,235,61 156,875,01 330,314,262 902,173,17

PE VPP no xaT selaS .tsE 375,176,83 — — — — —






PE VPP no xaT rehtO .tsE — 505,806 625,661,5 712,625,3 — —

sexaT dna seiveL suniM PE VPP 394,625,202$ 602,211,65$ 686,229,773$ 538,617,713$ 270,883,243,8$ 780,966,712,2$

PE VPP ten gvA 947$ 596$ 537$ 827$ 182,1$ 400,1$









,a1102( adanaC scitsitatS ;)1102( .cnI hcraeseR ASM ;)1102 ,0102( QAAS ;)9002( IPM ;)0102( IGS ;)0102( CBCI ;)b1102 ,a1102 ,9002( CBI ;)1102 ,7002( ASIG :secruoS.snoitaluclac s’rohtua ;)b1102



QC MBa SK BC

Population 7,828,400 1,219,600 1,029,100 4,460,300

Earned Private Passenger Vehicles (PPVs)b 4,114,507 641,006 540,882 2,344,277

PPVs % population 52.56% 52.56% 52.56% 52.56%


GDP per person $34,168 $34,501 $38,684 $36,287


PI per person $33,623 $33,558 $36,107 $35,196


PDI per person $26,031 $26,915 $29,427 $28,038

Total Earned Premiums (EP)c $3,676,385,000 $1,069,571,000 $793,851,000 $3,891,643,000

Plus unfunded premiums deficit (Nettotal loss)d

($217,300,000) ($244,627,000) ($46,873,000) ($302,489,000)

Minus rebates paid to insured driverse $0 $0 $19,000 $316,015,000

Net total EP $3,459,085,000 $824,944,000 $746,959,000 $3,273,139,000

EP PPV onlyf $2,883,000,831 $687,555,882 $622,558,687 $2,728,022,716

PPV EP % total EP 83.35% 83.35% 83.35% 83.35%

Health leviesh $0 $0 $24,218,000 $0

Est. premium tax on PPV EP 96,580,528 20,626,676 31,127,934 120,032,999

Est. sales tax on PPV EP 144,150,042 0 0 0

Est. other tax on PPV EP 0 8,594,449 0 0


Avg net PPV EP $642 $1,027 $1,049 $1,112




aMPI uses an unusual fiscal year for reporting data that covers March 1 to February 28/29 each year; therefore for MPI data, the fiscal yearending February 29, 2010 covers 10 months of the year 2009 and 2 months of the year 2010, but is used here for comparison to the 2009figures reported by calendar year by all other jurisdictions, and by private insurers operating in the optional market in Manitoba.bData for NL, PE, NS, NB, ON, and AB are actual figures supplied by GISA; QC, MB, SK, and BC do not report data that are comparablydefined to that published by the other six provinces. Therefore, data from QC, MB, SK, and BC are estimated by applying the proportionalaverage of the other provinces for which data is reported consistent with a universal regulatory standard.cTotal Earned Premiums cover the entire market (i.e., public plus private insurers; personal passenger, commercial, and recreationalvehicles) and include any insurance-related service fees charged to insured drivers.di.e., net comprehensive loss (income) reported in audited income statements for SAAQ, MPI, SGI, and ICBC. For fare comparisonunrealized incomes are also reported in calculation.eGovernment insurers sometimes return current year surpluses to drivers in the form of rebates. Sometimes these rebates are legislatedregardless of whether there is a current year surplus.fData for NL, PE, NS, NB, ON, and AB are actual figures supplied by GISA; QC, MB, SK, and BC do not report data that are comparably defined to that published by the other six provinces. Therefore, data from QC, MB, SK, and BC are estimated by applying the proportional averageof the other provinces for which data is reported consistent with a universal regulatory standard.gAt February 29, 2008, the rebate was estimated to be $62,700,000. The amount was actualized during the current fiscal year when$62,646,000 was distributed to Basic policyholders. On December 2, 2008, the Public Utilities Board released its ruling on the corporation’s2009/2010 Basic Insurance rate application. There is no surplus distribution in 2009/2010.hFunding to Saskatchewan Health Organization to provide for rehab services for those injured in auto accidents—extracted from annualreports.Sources: GISA (2007, 2011); IBC (2009, 2011a, 2011b); ICBC (2010); SGI (2010, 2011); MPI (2010); SAAQ (2010, 2011); MSA Research Inc.(2011); Statistics Canada (2011a, 2011b); author’s calculations.

Key def i ni tions

For more def i ni tions of in sur ance-re lated terms, please see IBC, 2011b.

Acci dent ben e fitsThe au to mo bile in sur ance cov er age that pays for per sonal in ju ries to the in di vid u alscov ered by the in sur ance pol icy.

Aver age cost per claimThe to tal amount paid out for all claims di vided by the to tal num ber of claims. The re -sult is an av er age, which is some times re ferred to as the “claims se ver ity.”

Bodily injuryAn in jury a per son sus tains as a re sult of an au to mo bile ac ci dent.

CAT limit Short for Cat a strophic in jury limit, the CAT limit in cludes med i cal and re ha bil i ta tioncov er age, tran si tional ex pense cov er age, at ten dant care cov er age, as sess ment cov er -age, etc.

ClaimThe av er age cost to an in sur ance com pany for ev ery risk they in sure. For ex am ple, inau to mo bile in sur ance, this would be the to tal amount paid out in claims di vided by the to tal num ber of ve hi cles in sured.

Claims incurredThe to tals for all claims paid and re lated claim ex penses dur ing a spe cific ac count ingpe riod(s) plus the changes in the pro vi sion for un paid claims for the same pe riod oftime.

Com pre hen sive incomeGen er ally, com pre hen sive in come equals net in come mi nus all rec og nized changes ineq uity dur ing a pe riod. Losses or gains on for eign cur rency trans ac tions are ex am ples.For most firms, com pre hen sive in come is more vol a tile, ex ceed ing net in come in some years, but fall ing be low net in come in oth ers. Some pub lic auto in sur ers de fine it as in -come con sist ing of net in come af ter sur plus dis tri bu tion and other com pre hen sive in -come. Changes in un re al ized gains and losses on fi nan cial as sets clas si fied as “avail able



for sale,” and changes in un re al ized for eign ex change cur rency trans la tion amountsare re corded in the State ment of Com pre hen sive In come, and in cluded in ac cu mu -lated other com pre hen sive in come un til rec og nized in the State ment of Op er a tions.Ac cu mu lated other com pre hen sive in come is some times in cluded on the bal ancesheet as a sep a rate com po nent.

Deduct iblesIn an in sur ance pol icy, the de duct ible is the por tion of any claim that is not cov ered bythe in sur ance pro vider. It is the amount of ex penses that must be paid out of pocketbe fore an in surer will cover any ex penses.

GAAPGAAP re fers to Gen er ally Ac cepted Ac count ing Prin ci ples. These are de fined in thehand book pre pared by the Ca na dian In sti tute of Char tered Ac coun tants.

GDP Gross Do mes tic Prod uct, or GDP, is the to tal value of all fi nal goods and ser vices pro -duced in a ju ris dic tion in a given year. It is equal to to tal con sumer, in vest ment, andgov ern ment spend ing, plus the value of ex ports, mi nus the value of im ports.

Health lev iesIf driv ers are in jured in a car ac ci dent, they are cov ered by their auto in sur ance. At thesame time, Ca na di ans have uni ver sal health care and any emer gency care or vis its todoc tor will ini tially be paid for by the pro vin cial health care plan. Con sum ers never seethe bill, but the auto in sur ers may—hy po thet i cally. Ev ery year, pri vate in sur ers re im -burse pro vin cial health plans for treat ment given to crash vic tims. This is called a“health levy” or “ag gre gate as sess ment,” and is an im por tant source of funds for pro -vin cial health care sys tems in Al berta, On tario, New Bruns wick, Nova Sco tia, PrinceEd ward Is land, and New found land & Lab ra dor.

IFRSIn ter na tional Fi nan cial Re port ing Stan dards (IFRSs) are the col lec tion of fi nan cial re -port ing stan dards is sued by the In ter na tional Ac count ing Stan dards Board (IASB), anin de pend ent, in ter na tional stan dard-set ting or ga ni za tion. In Jan u ary 1, 2011, IFRSsre placed Ca na dian Gen er ally Ac cepted Ac count ing Prin ci ples (GAAP) as the fi nan cial re port ing frame work for pub licly ac count able en ter prises and gov ern ment busi nessen ter prises.



Infla tion rateThe rate of in crease of a price in dex (for ex am ple, a con sumer price in dex) is the in fla -tion rate. It is com monly meant as a per cent age rate of change in price level over time.

Loss ratio (Claims ratio)This ra tio mea sures losses as a per cent age of pre mi ums earned.

“No-fault” sys temThe term no-fault is most com monly used in the con text of state or pro vin cial au to -mo bile in sur ance laws in the United States, Can ada, and Aus tra lia, in which a pol i cy -holder (and his or her pas sen gers) are re im bursed by the pol i cy holder’s own in sur ancecom pany with out proof of fault, but have only re stricted rights to seek re cov erythrough the civil jus tice sys tem for losses caused by oth ers.

P&C insur anceThe prop erty and ca su alty (P&C) in sur ance in dus try in Can ada pro vides cov er age forall risks other than life.

Per sonal injury Per sonal in jury is a le gal term for an in jury to the body, mind, or emo tions, as op posedto an in jury to prop erty. The term most com monly re fers to a type of tort law suit al leg -ing that the plain tiff’s in jury has been caused by the neg li gence of an other.

Per sonal income (PI) In eco nom ics, per sonal in come re fers to an in di vid ual’s to tal earn ings from wages, in -vest ment, en ter prises, and other ven tures.

Per sonal dis pos able income (PDI)The amount an in di vid ual has left over to spend on goods and ser vices, af ter pay mentof per sonal di rect taxes, na tional in sur ance, and pen sion con tri bu tions.

PPVA Pri vate Pas sen ger Ve hi cle (PPV) is one not used as a com mer cial ve hi cle. If a smallvan is used to trans port a fam ily, it is con sid ered a pri vate pas sen ger ve hi cle. How ever,if this same van is used full-time for de liv er ies, it is con sid ered a com mer cial ve hi cle.

Pre miumThe amount that a pol icy holder pays to day to in sure against a spe cific set of risk(s) isthe pre mium. In the ory, the pre mium re flects the cur rent value of the claims that a



pool of pol i cy hold ers can be ex pected to make in the fu ture, as well as the costs of ad -min is ter ing those po ten tial claims.

Pre mium taxA pre mium tax is col lected from pol i cy hold ers and paid to the prov ince. It is cal cu -lated as a per cent age of gross pre mi ums writ ten.

Prop erty dam age Dam age done to prop erty, in clud ing a ve hi cle, a house, or a com mer cial build ing, isprop erty dam age.

Third-party lia bil ityThird-party li a bil ity is the por tion of your pol icy that cov ers dam ages to oth ers, in -clud ing their prop erty, for which you are re spon si ble.

Under writ ing income or lossFor an in sur ance com pany, the dif fer ence be tween the pre mi ums earned and the costsof set tling claims is the un der writ ing in come (or loss).

Unre al ized gains (or losses) on “avail able for sale” assetsA profit (or loss) that re sults from hold ing on to an as set rather than cash ing it in andus ing the funds be comes an un re al ized gain (or loss). For ex am ple, if the price of an as -set that a com pany owns has dou bled, but the com pany has n’t yet sold it, this is said tobe an un re al ized gain.



Ref er ences

Gov ern ment sources

Al berta, Fi nance and En ter prise (n.d.). Au to mo bile Accident Insurance BenefitsAmendment Regulation. Gov ern ment of Al berta, Fi nance and En ter prise.<http://www.finance.alberta.ca/publications/insurance/insurance_regulation_accident_insurance_benefits_amendment.pdf>, as of Sep tem ber 16, 2011.

Autorité des marchés fi nan ciers [AMF] (2010). Que bec Au to mo bile In sur ance Pol icy. The autorité des marchés fi nan ciers. <http://www.lautorite.qc.ca/files/pdf/professionnels/assureurs/formulaires-avenants-assurance-auto/qpf1-ang-10.pdf>, as of Sep tem ber 16, 2011.

Brit ish Co lum bia, Min is try of Fi nance (2006). Bud get and Fis cal Plan2006/07—2008/09. Gov ern ment of Brit ish Co lum bia. <http://www.bcbudget.gov.bc. ca/2006/bfp/BudgetandFiscalPlan_06.pdf>, as of Sep tem ber 16, 2011.

Brit ish Co lum bia, Min is try of Fi nance (2010). Bud get and Fis cal Plan 2010/11—2012/13. Min is try of Fi nance, Brit ish Co lum bia. <http://www.bcbudget.gov.bc.ca/2010/bfp/2010_Budget_Fiscal_Plan.pdf>, as of Sep tem ber 16, 2011.

Can ada, De part ment of Fi nance (2003). Can ada’s Financial Services Sector: Prop ertyand Casualty Insurance in Can ada. Web page. <http://www.fin.gc.ca/toc/2003/property_-eng.asp>, as of Sep tem ber 16, 2011.

In sur ance Cor po ra tion of Brit ish Co lum bia [ICBC] (var i ous years, 2007-2010). An -nual Re ports, 2006-2009. In sur ance Cor po ra tion of Brit ish Co lum bia.<http://www.icbc.com/about-ICBC/company_info/annual-report>, as of Sep tem ber 16, 2011.

In sur ance Cor po ra tion of Brit ish Co lum bia [ICBC] (2011). ICBC Autoplan In sur -ance. In sur ance Cor po ra tion of Brit ish Co lum bia. <http://www.icbc.com/autoplan-insurance/autoplan-insurance.pdf>, as of Sep tem ber 16, 2011.

Man i toba Pub lic In sur ance [MPI] (var i ous years, 2007-2010). An nual Re ports,2006-2009. Man i toba Pub lic In sur ance. <http://www.mpi.mb.ca/english/newsroom/ annualreports.html>, as of Sep tem ber 16, 2011.



http://www.finance.alberta.ca/publications/insurance/insurance_regulation_accident_insurance_benefits_amendment.pdf

http://www.finance.alberta.ca/publications/insurance/insurance_regulation_accident_insurance_benefits_amendment.pdf

http://www.lautorite.qc.ca/files/pdf/professionnels/assureurs/formulaires-avenants-assurance-auto/qpf1-ang-10.pdf

http://www.lautorite.qc.ca/files/pdf/professionnels/assureurs/formulaires-avenants-assurance-auto/qpf1-ang-10.pdf

http://www.bcbudget.gov.bc.ca/2006/bfp/BudgetandFiscalPlan_06.pdf

http://www.bcbudget.gov.bc.ca/2006/bfp/BudgetandFiscalPlan_06.pdf

http://www.bcbudget.gov.bc.ca/2010/bfp/2010_Budget_Fiscal_Plan.pdf

http://www.bcbudget.gov.bc.ca/2010/bfp/2010_Budget_Fiscal_Plan.pdf

http://www.fin.gc.ca/toc/2003/property_-eng.asp

http://www.fin.gc.ca/toc/2003/property_-eng.asp

http://www.icbc.com/about-ICBC/company_info/annual-report

http://www.icbc.com/autoplan-insurance/autoplan-insurance.pdf

http://www.icbc.com/autoplan-insurance/autoplan-insurance.pdf

http://www.mpi.mb.ca/english/newsroom/annualreports.html

http://www.mpi.mb.ca/english/newsroom/annualreports.html

Man i toba Pub lic In sur ance [MPI] (2011). Guide to Autopac. Man i toba Pub lic In sur -ance <http://www.mpi.mb.ca/PDFs/PolicyGuide2011.pdf>, as of Sept. 16, 2011.

New Bruns wick (no date). Stan dard au to mo bile pol icy for Nova Sco tia. Gov ern mentof New Bruns wick. <http://www.gnb.ca/0062/InsuranceBranch/PDF/Bulletins/StandardOwnersAct-E.pdf>, as of Sep tem ber 16, 2011.

New found land and Lab ra dor (1990, amended 2010). Au to mo bile In sur ance Act.Gov ern ment of New found land and Lab ra dor. <http://assembly.nl.ca/Legislation/sr/statutes/a22.htm>, as of Sep tem ber 16, 2011.

Nova Sco tia (2005). Stan dard Automobile Policy (Owner’s Form) for Nova Sco tia.Gov ern ment of Nova Sco tia. <http://www.gov.ns.ca/finance/site-finance/media/finance/NS_Auto_Standard_Policy_Form1.pdf>, as of Sep tem ber 16, 2011.

On tario, Min is try of Fi nance (2003). Au to mo bile Insurance Affordability Plan forOn tario: Next Steps. Gov ern ment of On tario. <http://www.fin.gov.on.ca/en/publications/2003/autoins.pdf>, as of Sep tem ber 16, 2011.

On tario (2011). In sur ance Act: Stat u tory Accident Benefits Schedule—Accidents onor After November 1, 1996. Gov ern ment of On tario. <http://www.e-laws.gov.on.ca/html/regs/english/elaws_regs_960403_e.htm>, as of Sep tem ber 16, 2011.

Prince Ed ward Is land (no date). Standard Au to mo bile Pol icy (Owner’s Form) forPrince Ed ward Is land. Gov ern ment of Prince Ed ward Is land.<http://www.murco.nb.ca/pdfs/auto_PE.pdf>, as of Sep tem ber 16, 2011.

Sas katch e wan Gov ern ment In sur ance [SGI] (2007). Per sonal auto in jury in sur ance.Web page. <http://www.sgi.sk.ca/individuals/registration/personalautoinjury/index.html>, as of Sep tem ber 16, 2011.

Sas katch e wan Gov ern ment In sur ance [SGI] (var i ous years, 2008-2011). Sas katch e -wan Auto Fund An nual Re ports, 2007-2010. Sas katch e wan Gov ern ment In sur anceAuto Fund. <http://www.sgi.sk.ca/about/publications/annualreports/ index.html>,as of Sep tem ber 16, 2011.

Société de l’assurance au to mo bile du Qué bec [SAAQ] (var i ous years, 2002-2011).Rap port annuel de gestion de la Société de l’assurance au to mo bile du Qué bec,2001-2010. Société de l’assurance au to mo bile du Qué bec. <http://www.saaq.gouv.qc.ca/documents/documents_pdf/nous/rapportsgestion_archives.php>, as of Sep -tem ber 16, 2011.



http://www.mpi.mb.ca/PDFs/PolicyGuide2011.pdf

http://www.gnb.ca/0062/InsuranceBranch/PDF/Bulletins/StandardOwnersAct-E.pdf

http://www.gnb.ca/0062/InsuranceBranch/PDF/Bulletins/StandardOwnersAct-E.pdf

http://assembly.nl.ca/Legislation/sr/statutes/a22.htm

http://assembly.nl.ca/Legislation/sr/statutes/a22.htm

http://www.gov.ns.ca/finance/site-finance/media/finance/NS_Auto_Standard_Policy_Form1.pdf

http://www.gov.ns.ca/finance/site-finance/media/finance/NS_Auto_Standard_Policy_Form1.pdf

http://www.fin.gov.on.ca/en/publications/2003/autoins.pdf

http://www.fin.gov.on.ca/en/publications/2003/autoins.pdf

http://www.e-laws.gov.on.ca/html/regs/english/elaws_regs_960403_e.htm

http://www.e-laws.gov.on.ca/html/regs/english/elaws_regs_960403_e.htm

http://www.murco.nb.ca/pdfs/auto_pei.pdf

http://www.sgi.sk.ca/individuals/registration/personalautoinjury/index.html

http://www.sgi.sk.ca/individuals/registration/personalautoinjury/index.html

http://www.sgi.sk.ca/about/publications/annualreports/index.html

http://www.saaq.gouv.qc.ca/documents/documents_pdf/nous/rapportsgestion_archives.php

http://www.saaq.gouv.qc.ca/documents/documents_pdf/nous/rapportsgestion_archives.php

Non-gov ern ment sources

Ca na dian In sti tute of Char tered Ac coun tants [CICA] (2011). Def i ni tion of Gov ern -ment Busi ness En ter prise. Web page. Ca na dian In sti tute of Char tered Ac coun tants.<http://www.cica.ca/transition/other-accounting-standards/item34823.aspx> , as ofSep tem ber 16, 2011.

Con sum ers’ As so ci a tion of Can ada [CAC] (2003). Re view of Au to mo bile In sur anceRates: 40 Ca na dian Cit ies, 10 Prov inces. Con sum ers’ As so ci a tion of Can ada.<http://www.consumer.ca/pdfs/030910_report.pdf>, as of Sep tem ber 16, 2011.

Cummins, J., R. Phillips, and S. Ten ny son (2001). Reg u la tion, po lit i cal in flu ence, and the price of au to mo bile in sur ance. Jour nal of In sur ance Reg u la tion 20:9-50.

Derrig, Rich ard, and Sharon Ten ny son (2008). The Im pact of Rate Reg u la tion onClaims Ev i dence from Mas sa chu setts Au to mo bile In sur ance. Ca su alty Ac tu ar ial So ci -ety, 2008 Dis cus sion Pa per Pro gram. <http://www.casact.org/pubs/dpp/dpp08/08dpp1.pdf>, as of Sep tem ber 16, 2011.

Devlin, Rose Anne (1992). Li a bil ity ver sus no-fault au to mo bile in sur ance re gimes:An anal y sis of the ex pe ri ence in Que bec. In Geor ges Dionne (ed.), Con tri bu tions toIn sur ance Eco nom ics. Kluwer Ac a demic Pub lish ers, 499-520.

Dionne, Geor ges (2001).Com mit ment and Au to mo bile In sur ance Reg u la tion inFrance, Que bec and Ja pan. Work ing pa per 01-04 (April). École des Hautes ÉtudesCommerciales (HEC) Mon treal. <http://neumann.hec.ca/gestiondesrisques/01-04.pdf>, as of Sep tem ber 16, 2011.

Gen eral In sur ance Sta tis ti cal Agency [GISA] (2007). Au to mo bile Sta tis ti cal PlanMan ual. Gen eral In sur ance Sta tis ti cal Agency. <http://www.gisa.ca/en/techman/documents/ASP_Manual_V1.5_En.pdf>, as of Sep tem ber 16, 2011.

Gen eral In sur ance Sta tis ti cal Agency [GISA] (2011). Spe cial data re quest. Re ceivedelec tron i cally on CD from Rob ert Troiani and Sabitha Kanagasabai.

Har ring ton, Scott (2001). Ef fects of prior ap proval rate reg u la tion of au to mo bile in -sur ance. In J. Da vid Cummins (ed.), De-reg u lat ing Prop erty-Li a bil ity In sur ance: Re -stor ing Com pe ti tion and In creas ing Mar ket Ef fi ciency (AEI Brookings Joint Cen terfor Reg u la tory Stud ies): 285-312. <http://books.google.com/books/about/Deregulating_property_liability_insuranc.html?id=FnkpKl2WndUC>, as of Sep tem -ber 16, 2011.



http://www.cica.ca/transition/other-accounting-standards/item34823.aspx

http://www.consumer.ca/pdfs/030910_report.pdf

http://www.casact.org/pubs/dpp/dpp08/08dpp1.pdf

http://www.casact.org/pubs/dpp/dpp08/08dpp1.pdf

http://neumann.hec.ca/gestiondesrisques/01-04.pdf

http://neumann.hec.ca/gestiondesrisques/01-04.pdf

http://www.gisa.ca/en/techman/documents/ASP_Manual_V1.5_En.pdf

http://www.gisa.ca/en/techman/documents/ASP_Manual_V1.5_En.pdf

http://books.google.com/books/about/Deregulating_property_liability_insuranc.html?id=FnkpKl2WndUC

http://books.google.com/books/about/Deregulating_property_liability_insuranc.html?id=FnkpKl2WndUC

Hynes, T., MacAulay, K., Mahaffey, and B. Wright (2003). Pre med i tated andOpportunistic Fraud in Personal Injury Claims (re vised). Ca na dian Co ali tionAgainst In sur ance Fraud.

In sur ance Bu reau of Can ada [IBC] (2009). Facts of the Gen eral In sur ance In dus try inCan ada 2009. In sur ance Bu reau of Can ada. <http://www.ibc.ca/en/need_more_info/documents/facts%20book%202009_eng.pdf>, as of Sep tem ber 16, 2011.

In sur ance Bu reau of Can ada [IBC] (2011a). Car In sur ance. Web page.<http://ibc.ca/en/Car_Insurance/index.asp>, as of June 15, 2011.

In sur ance Bu reau of Can ada [IBC]. (2011b). Glos sary. Web page.<http://ibc.ca/en/Need_More_Info/Glossary/H.asp#HCMU_Accident_Benefits>, asof Sep tem ber 16, 2011.

In sur ance Bu reau of Can ada [IBC]. (2011c). Types of Per sonal In jury Fraud: Pre med -i tated Personal Injury Fraud—Auto Insurance. Web page. <http://www.ibc.ca/en/Insurance_Crime/Personal_Injury_Fraud/Types.asp>, as of Sep tem ber 16, 2011.

Leadbetter, Darrell, Jane Voll, and Erica Wieder. (2004). The Ef fects of Rate Reg u la -tion on the Vol a til ity of Auto In sur ance Prices: Ev i dence from Can ada. Ca na dianEco nom ics As so ci a tion. <http://economics.ca/2004/papers/0007.pdf>, as of Sep tem -ber 16, 2011.

Mack, Heather (2010). The Road to Re form: On tario Auto In sur ance. Powerpointpre sen ta tion to Ca na dian In sur ance Ac coun tants As so ci a tion (CIAA), Sep tem ber,2010. In sur ance Bu reau of Can ada. <http://www.ciaa.org/Conference_Presentations/CIAA_auto%20reform_Sept16-10.pdf>, as of Sep tem ber 16, 2011.

Milke, Mark (2006). Myths and Facts about Au to mo bile In sur ance in Can ada. In sur -ance Bu reau of Can ada. <http://www.ibc.ca/en/media_centre/documents/2006releaseattachments/report_mythsfact_nrdec27-06.pdf>, as of Sept. 16, 2011.

Milke, Mark (2007). Mo nop oly In sur ance: Un fair at Any Price. Pol icy Se ries No. 32.Fron tier Cen tre for Pub lic Pol icy. <http://www.fcpp.org/images/publications/32.%202007%20Feb%20Unfair%20at%20Any%20Price.pdf>, as of Sept. 16, 2011.

MSA Re search Inc. (2011). Spe cial data re quest. Re ceived elec tron i cally from JoelBaker.

Mul lins, Mark (2003). Two Hun dred Bucks More: The Pre mium Cost of Pub lic AutoIn sur ance. Fra ser Alert. Fra ser In sti tute. <http://www.fraserinstitute.org/research-news/research/display.aspx?id=13551>, as of Sep tem ber 16, 2011.



http://www.ibc.ca/en/need_more_info/documents/facts%20book%202009_eng.pdf

http://www.ibc.ca/en/need_more_info/documents/facts%20book%202009_eng.pdf

http://ibc.ca/en/Car_Insurance/index.asp

http://ibc.ca/en/Need_More_Info/Glossary/H.asp

http://www.ibc.ca/en/Insurance_Crime/Personal_Injury_Fraud/Types.asp

http://www.ibc.ca/en/Insurance_Crime/Personal_Injury_Fraud/Types.asp

http://economics.ca/2004/papers/0007.pdf

http://www.ciaa.org/Conference_Presentations/CIAA_auto%20reform_Sept16-10.pdf

http://www.ciaa.org/Conference_Presentations/CIAA_auto%20reform_Sept16-10.pdf

http://www.ibc.ca/en/media_centre/documents/2006releaseattachments/report_mythsfact_nrdec27-06.pdf

http://www.ibc.ca/en/media_centre/documents/2006releaseattachments/report_mythsfact_nrdec27-06.pdf

http://www.fcpp.org/images/publications/32.%202007%20Feb%20Unfair%20at%20Any%20Price.pdf

http://www.fcpp.org/images/publications/32.%202007%20Feb%20Unfair%20at%20Any%20Price.pdf

http://www.fraserinstitute.org/research-news/research/display.aspx?id=13551

http://www.fraserinstitute.org/research-news/research/display.aspx?id=13551

Perkins, Tara (July 28, 2010; up dated Au gust 26, 2010). RBC warns of ris ing in sur -ance fraud. Globe and Mail. <http://www.theglobeandmail.com/globe-investor/personal-finance/rbc-warns-of-rising-insurance-fraud/article1655018/>, as of Sep -tem ber 16, 2011.

Perkins, Tara, and Grant Rob ert son ( 2010, Oc to ber 4). In sur ers be ware: Na tionalwatch dog raises alarm for fraud. Globe and Mail. <http://www.theglobeandmail.com/report-on-business/insurers-beware-national-watchdog-raises-alarm-for-fraud/article1740676/>, as of Sep tem ber 16, 2011.

Pub lic Sec tor Ac count ing Board [PSAB] (2011). Sum mary Com par i son of CICAPub lic Sec tor Ac count ing Hand book and CICA Hand book—Ac count ing. Pub lic Sec -tor Ac count ing Board. <http://www.psab-ccsp.ca/documents/item36400.pdf>, as ofSep tem ber 16, 2011.

Regan, Laureen, Sharon Ten ny son, and Mary Weiss (2009). The Re la tion ship Be -tween Auto In sur ance Rate Reg u la tion and In sured Loss Costs: An Em pir i cal Anal y -sis. Na tional As so ci a tion of In sur ance Com mis sion ers. <http://tennyson.human.cornell.edu/research/The%20Relationshnip%20between%20Auto%20Insurance%20Rate%20Regulation%20and%20Insured%20Loss%20Costs%20-%20An%20Empirical%20Analysis.pdf>, as of Sep tem ber 16, 2011.

Rous seau-Houle, Thérèse (1998). Le régime québécois d’assurance au to mo bile, vingt ans après. Les Ca hiers de droit 39: 213-232. <http://www.erudit.org/revue/cd/1998/v39/n2-3/043491ar.pdf>, as of Sep tem ber 16, 2011.

Skin ner, Brett (2006). Auto In sur ance Mar ket Qual ity In dex 2006: An nual Com par i -son of In ter na tional Auto In sur ance Mar kets In clud ing 61 Ju ris dic tions in Can ada,the United States and the United King dom. Fra ser In sti tute Dig i tal Pub li ca tion. Fra -ser In sti tute. <http://www.fraserinstitute.org/WorkArea/DownloadAsset.aspx?id=2216>, as of Sep tem ber 16, 2011.

Skin ner, Brett (2007). The False Prom ise of Gov ern ment Auto In sur ance: Es ti mat ingAv er age Auto In sur ance Pre mi ums in Ten Prov inces, 2004-05. Fra ser In sti tute Dig i tal Pub li ca tion. The Fra ser In sti tute. <http://www.fraseramerica.org/commerce.web/product_files/Falsepromise3.pdf>, as of Sep tem ber 16, 2011.

Skin ner, Brett (2008). The Per sonal Cost and Affordability of Au to mo bile In sur ancein Can ada: 2008 Edi tion. Stud ies in In sur ance Pol icy. Fra ser In sti tute.<http://www.fraserinstitute.org/research-news/display.aspx?id=13527>, as of Sep -tem ber 16, 2011.



http://www.theglobeandmail.com/globe-investor/personal-finance/rbc-warns-of-rising-insurance-fraud/article1655018/

http://www.theglobeandmail.com/globe-investor/personal-finance/rbc-warns-of-rising-insurance-fraud/article1655018/

http://www.theglobeandmail.com/report-on-business/insurers-beware-national-watchdog-raises-alarm-for-fraud/article1740676/



http://www.psab-ccsp.ca/documents/item36400.pdf

http://tennyson.human.cornell.edu/research/The%20Relationshnip%20between%20Auto%20Insurance%20Rate%20Regulation%20and%20Insured%20Loss%20Costs%20-%20An%20Empirical%20Analysis.pdf




http://www.erudit.org/revue/cd/1998/v39/n2-3/043491ar.pdf

http://www.erudit.org/revue/cd/1998/v39/n2-3/043491ar.pdf

http://www.fraserinstitute.org/WorkArea/DownloadAsset.aspx?id=2216

http://www.fraserinstitute.org/WorkArea/DownloadAsset.aspx?id=2216

http://www.fraseramerica.org/commerce.web/product_files/Falsepromise3.pdf

http://www.fraseramerica.org/commerce.web/product_files/Falsepromise3.pdf

http://www.fraserinstitute.org/research-news/display.aspx?id=13527

Skin ner, Brett, and Mark Rovere (2010). Auto In sur ance Mar ket Qual ity In dex 2010: Com par i son of North Amer i can Auto In sur ance Mar kets. Fra ser Alert. Fra ser In sti tute. <http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/auto-insurance-market-quality-index-2010.pdf>, as of Sep -tem ber 16, 2011.

Sta tis tics Can ada (2011a). Spe cial data re quest. Re ceived elec tron i cally from DerekAd ams.

Sta tis tics Can ada (2011b). Pro vin cial Eco nomic Ac counts. Sta tis tics Can ada.

Ten ny son, Sharon (1997). The im pact of rate reg u la tion on state au to mo bile in sur -ance mar kets. Jour nal of In sur ance Reg u la tion 15:502-523.



http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/auto-insurance-market-quality-index-2010.pdf

http://www.fraserinstitute.org/uploadedFiles/fraser-ca/Content/research-news/research/publications/auto-insurance-market-quality-index-2010.pdf

Acknowl edg ment and dis claimer

The au thors are grate ful for the ad vice pro vided by Brett Skin ner, Pres i dent of the Fra -ser In sti tute and au thor of the pre vi ous edi tions of this study; and the sup ply and in ter -pre ta tion of data pro vided by Joel Baker of MSA Re search Inc., Derek Ad ams ofSta tis tics Can ada, and Alex Gainer and Bac chus Barua of the Fra ser In sti tute.

We would also like to thank all those involved in the pro duc tion and release ofthis study. The authors, of course, take full and com plete respon si bil ity for anyremain ing errors or omis sions. As they have worked inde pend ently, the viewsexpressed in this study do not nec es sar ily rep re sent the views of the trust ees, sup port -ers, or other staff of the Fra ser Insti tute.



About the authors

Neil Mohindra is the Di rec tor of the Cen tre for Fi nan cial Pol icy Stud ies at the Fra serIn sti tute. Mr. Mohindra pre vi ously worked for the Fi nan cial Ser vices Com mis sion ofOn tario as Pol icy Man ager for the Joint Fo rum Sec re tar iat, Joint Fo rum of Fi nan cialMar ket Reg u la tors, in which he man aged the cross-sec toral pro jects of Ca na dian pro -vin cial pen sion, se cu ri ties, and in sur ance reg u la tors. This in cluded stra te gic plan ning,de vel op ing pol icy op tions and rec om men da tions, man ag ing ex ter nal stake holder en -gage ment, and de vel op ing com mu ni ca tions strat e gies. Mr. Mohindra worked for In -sur ance Bu reau of Can ada as a se nior pol icy an a lyst and led the de vel op ment ofin dus try po si tions on a num ber of is sues key to the prop erty and ca su alty in sur ance in -dus try, such as the 2006 re view of fed eral fi nan cial in sti tu tions leg is la tion. Prior to theIn sur ance Bu reau of Can ada, he was a pol icy an a lyst on fi nan cial sec tor is sues at theDe part ment of Fi nance Can ada where his re spon si bil i ties in cluded brief ing the de -part ment’s mem ber on the Fi nan cial Sta bil ity Fo rum. Ear lier, he was a re search as so ci -ate with the Task Force on the Fu ture of the Ca na dian Fi nan cial Ser vices Sec tor (the“MacKay Task Force”). Mr. Mohindra also pre vi ously worked at the Fra ser In sti tutewhere he authored a num ber of pa pers, ar ti cles, and opin ion pieces on se cu ri ties reg u -la tion. He holds a BA (Hon ours) in So cial Sci ences (Eco nom ics) from the Uni ver sity ofOt tawa and an MBA in Fi nance from McGill Uni ver sity.

M. Emrul Hasan is a Re searcher in the Cen tre for Fi nan cial Pol icy Stud ies at the Fra -ser In sti tute. He also teaches fi nance and eco nomic pol icy courses at Si mon Fra serUni ver sity as a teach ing as sis tant and in North South Uni ver sity (Ban gla desh) as a lec -turer. He is also con sult ing for firms in the bank ing, P3, ag ri cul ture, leather, and tex -tiles sec tors. Pre vi ously he worked at York Uni ver sity as a teach ing as sis tant. Prior tomov ing to Can ada, Mr. Emrul worked as a re search as so ci ate for the Asian Ti ger Cap i -tal Part ners in vest ment bank. He was a mem ber of both their mac ro eco nomic con sult -ing and cor po rate ad vi sory teams where he worked ex ten sively in M&A deals, sec torre search, pol icy stud ies, and ad vo cacy. He has pub lished in fi nance and eco nom ics. Hegrad u ated from York Uni ver sity with an MA in Fi nan cial Eco nom ics. He earned a BBA (summa cum laude) in Fi nance and Eco nom ics from North South Uni ver sity. He isalso a Char tered Fi nan cial An a lyst (CFA) can di date.



Pub lish ing infor ma tion

Pe ri od i cally, the Fra ser In sti tute pub lishes timely and com pre hen sive stud ies of cur -rent is sues in eco nom ics and pub lic pol icy. This study is one such ex am ple be long ingto a se ries of re lated pub li ca tions.

DistributionThese pub li ca tions are avail able from <http://www.fraserinstitute.org> in Por ta bleDoc u ment For mat (PDF) and can be read with Adobe Ac ro bat® 7 or later, or withAdobe Reader® 7 or later. Adobe Reader® 9, the most re cent ver sion, is avail able free ofcharge from Adobe Sys tems Inc. and may be down loaded from: <http://get.adobe.com/reader/>. We en cour age you to in stall the most re cent ver sion.

Order ing pub li ca tionsFor in for ma tion about or der ing the Fra ser In sti tute’s printed pub li ca tions, please con -tact the pub li ca tions co or di na tor

4 e-mail: [email protected] 4 tele phone: 604.688.0221 ext. 580 or, toll free, 1.800.665.3558 ext. 5804 fax: 604.688.8539

MediaFor me dia in qui ries, please con tact our Com mu ni ca tions De part ment

4 tele phone: 604.714.45824 e-mail: [email protected]

Copy rightCopy right © 2011 by the Fra ser In sti tute. All rights re served. No part of this pub li ca -tion may be re pro duced in any man ner what so ever with out writ ten per mis sion ex ceptin the case of brief pas sages quoted in crit i cal ar ti cles and re views.

ISSN1925-6450 Stud ies in Fi nan cial Pol icy (on line ver sion)

Date of issueOc to ber 2011



http://www.fraserinstitute.org

http://get.adobe.com/reader/

http://get.adobe.com/reader/

mailto:[email protected]


Cita tionMohindra, Neil, and M. Emrul Hasan (2011). The Per sonal Cost and Affordability ofAuto In sur ance in Can ada: 2011 Edi tion. Stud ies in Fi nan cial Pol icy. Fra ser In sti tute.

Editing and pro duc tionKristin McCahon

DesignLindsey Thomas Mar tin

Cover designBill Ray



About the Fraser Institute

Our vi sion is a free and pros per ous world where in di vid u als ben e fit from greaterchoice, com pet i tive mar kets, and per sonal re spon si bil ity. Our mis sion is to mea sure,study, and com mu ni cate the im pact of com pet i tive mar kets and gov ern ment in ter -ven tions on the wel fare of in di vid u als. Founded in 1974, we are an in de pend ent Ca na -dian re search and ed u ca tional or ga ni za tion with lo ca tions through out North Amer icaand in ter na tional part ners in over 85 coun tries. Our work is fi nanced by tax-de duct iblecon tri bu tions from thou sands of in di vid u als, or ga ni za tions, and foun da tions. In or der to pro tect its in de pend ence, the In sti tute does not ac cept grants from gov ern ment or con -tracts for re search.

Nous envisageons un monde li bre et prospère, où chaque personne bénéficie d’un plusgrand choix, de marchés concurrentiels et de responsabilités individuelles. No tre mis -sion consiste à mesurer, à étudier et à communiquer l’effet des marchés concurrentielset des in ter ven tions gouvernementales sur le bien-être des individus.

Sup port ing the Fra ser In sti tute

To learn how to sup port the Fra ser In sti tute, please con tact 4 Devel op ment Depart ment,

The Fra ser Insti tute, Fourth Floor, 1770 Burrard Street, Van cou ver, Brit ish Colum bia, Can ada V6J 3G7

4 tele phone, toll-free: 1.800.665.3558 ext. 5864 e-mail: [email protected]




Peer review

Val i dat ing the accu racy of our researchThe Fra ser In sti tute main tains a rig or ous peer re view pro cess for its re search. New re -search, ma jor re search pro jects, and sub stan tively mod i fied re search con ducted by the Fra ser In sti tute are re viewed by a min i mum of one in ter nal ex pert and two ex ter nal ex -perts. Re view ers are ex pected to have a rec og nized ex per tise in the topic area be ing ad -dressed. When ever pos si ble, ex ter nal re view is a blind pro cess.

Com men tar ies and con fer ence papers are reviewed by inter nal experts. Updatesto pre vi ously reviewed research or new edi tions of pre vi ously reviewed research arenot reviewed unless the update includes sub stan tive or mate rial changes in the meth -od ol ogy.

The review pro cess is over seen by the direc tors of the Insti tute’s research depart -ments who are respon si ble for ensur ing all research pub lished by the Insti tute passesthrough the appro pri ate peer review. If a dis pute about the rec om men da tions of thereview ers should arise dur ing the Insti tute’s peer review pro cess, the Insti tute has anEdi to rial Advi sory Board, a panel of schol ars from Can ada, the United States, andEurope to whom it can turn for help in resolv ing the dis pute.

State ment of pur pose, fund ing, and inde pend ence

The Fra ser In sti tute pro vides a use ful pub lic ser vice. We re port ob jec tive in for ma tionabout the eco nomic and so cial ef fects of cur rent pub lic pol i cies, and we of fer ev i -dence-based re search and ed u ca tion about pol icy op tions that can im prove the qual ity of life.

The Insti tute is a non-profit orga ni za tion. Our activ i ties are funded by char i ta bledona tions, unre stricted grants, ticket sales and spon sor ships from events, the licens -ing of prod ucts for pub lic dis tri bu tion, and the sale of pub li ca tions.

All research is sub ject to rig or ous review by exter nal experts, and is con ductedand pub lished sep a rately from the Insti tute’s Board of Trust ees and its donors.

The opin ions expressed by staff or author(s) are those of the indi vid u als them -selves, and should not be inter preted to reflect those of the Insti tute, its Board ofTrust ees, or its donors and sup port ers.

As a healthy part of pub lic dis cus sion among fel low cit i zens who desire toimprove the lives of peo ple through better pub lic pol icy, the Insti tute wel comes evi -dence-focused scru tiny of the research we pub lish, includ ing ver i fi ca tion of datasources, rep li ca tion of ana lyt i cal meth ods, and intel li gent debate about the prac ti caleffects of pol icy rec om men da tions.



Edi to rial Advi sory Board



Pro fes sor Armen AlchianPro fes sor Terry L. Ander sonPro fes sor Rob ert BarroPro fes sor Michael BlissPro fes sor James M. Buchanan† Pro fes sor Jean-Pierre CentiPro fes sor John ChantPro fes sor Bev DahlbyPro fes sor Erwin DiewertPro fes sor Ste phen EastonPro fes sor J.C. Her bert EmeryPro fes sor Jack L. GranatsteinPro fes sor Her bert G. GrubelPro fes sor James GwartneyPro fes sor Ron ald W. Jones

Dr. Jerry Jor danPro fes sor Ross McKitrickPro fes sor Michael ParkinPro fes sor Friedrich Schnei derPro fes sor Law rence B. SmithMr. Vito Tanzi

Past mem bersPro fes sor Friedrich A. Hayek*† Pro fes sor H. G. John son*Pro fes sor F. G. Pennance*Pro fes sor George Stigler*† Pro fes sor Edwin G. West*Sir Alan Walters*

* De ceased

† No bel Lau re ate

Documents

The Personal Cost and; Affordability of Auto Insurance in ... · 1 BC, SK, and MB deliver auto insur ance through Crown Cor po ra tions. They are the Insur ance Cor po ra - tion of