Public auto rates higher, says Fraser Institute report

A conservative think tank’s new study suggest rates in public auto insurance provinces will soon be higher than those in private market provinces. The Fraser Institute report notes that with current rate freezes and rollbacks in place, rates will actually fall below levels in provinces where auto insurance is government-run Saskatchewan, B.C., Manitoba and Quebec (which has partial public coverage).Currently, the study says, rates in BC, Saskatchewan and Manitoba are an average 11% higher than rates in private markets, while Quebec is 11% cheaper.Next year, when the price rollbacks take effect, premiums in these public markets will be about 18% higher than in other provinces, the study suggests. In total, drivers in public provinces will pay $200 million more than drivers in private provinces. Four of the top five premium rates will belong to public provinces in 2004, the study predicts.”It is a complete myth that public insurance is cheap. Hidden subsidies like unpaid taxes and inadequate reserves force taxpayers to ante up for their operations. True-cost premiums are much higher than the public insurers advertise,” says Mark Mullins, director of Ontario policy studies for the Fraser Institute.He adds that rates in the public market provinces should rise even further after 2004, for reasons including inadequate financial reserves.In 2004, BC will top all provinces, with Alberta the top private market. The study also notes that other rate comparisons, such as that done by the Consumers’ Association of Canada (CAC), are flawed because they are often based only on “basic” coverage and do not include common optional coverage, they do not include commercial auto and other vehicles beyond cars, and they compare based on “driver profiles” rather than average rates. It adds that information from public provinces is often difficult to obtain.They study uses information from variety of sources including the Insurance Bureau of Canada, the Office of the Superintendent of Financial Institutions, and the Fraser Institute’s own calculations.