Two words that private insurers frequently use to describe their advantage over government-run automobile insurance are: value and choice. Are they right?
Not that long ago, the Insurance Bureau of Canada (IBC) discounted statements made by the Consumers Association of Canada (CAC) that on average, Ontario drivers paid substantially higher premiums to insure their vehicles with private insurers, than did their counterparts in British Columbia, which uses a government-run insurance system. The IBC further countered that the average claims payout in Ontario was $8,878 compared to $2,391 paid in British Columbia. In their view, Ontario drivers receive more value than drivers in British Columbia.
I was curious about the accuracy of this statement. I could find no Ontario claims volume data on the IBC website, so I called the IBC consumer line directly for this information. I was told that the number of claims reported in 2005 was approximately 558,000, not all of which resulted in payouts. This number included several sub-categories such as collision, direct compensation, no-fault benefits, or bodily injury arising from a single accident; but each counted separately.
Thank goodness for the internet. From information posted to the Insurance Corporation of British Columbia website and armed with the information supplied by the Insurance Bureau of Canada, I arrived at an alternative explanation of why the average payout in British Columbia was lower than in Ontario. B.C.'s public insurer paid more claims, about twice as many. When you consider that B.C. has one-third the number of drivers that Ontario has, this is a pretty remarkable feat. When determining value, surely paying a larger number of claims at a lower amount should be equivalent to paying fewer claims, but at a higher amount.
When private insurers justify the high auto premiums they charge in Ontario, they frequently point to Ontario benefits as being the most generous in North America. This statement is completely true, especially when compared against the lower benefits paid by private insurers in other provinces. Yet, when viewing what is offered by public insurers in British Columbia, Saskatchewan, Manitoba, and Quebec, Ontario's benefits appear almost paltry in comparison.
Here are some of the highlights of the available benefits:
- British Columbia has the only public insurance system that pays less than Ontario, but while B.C. drivers retain the right to sue an at-fault driver, Ontario drivers are subject to a $30,000 deductible.
- The basic maximum weekly indemnity available in Quebec, Manitoba, and Saskatchewan is much higher than in Ontario. Higher limits must be purchased in Ontario.
- Although the Quebec and Manitoba no-fault systems do not permit drivers to sue, those who suffer proven injuries are eligible to receive a lump-sum settlement, irrespective of fault.
- Quebec's coverage applies to an injury suffered by a Quebec resident anywhere in the world.
- Saskatchewan drivers can opt out of the no-fault system and retain the right to sue, but they risk receiving lower benefits if they are at fault.
| Prov | Insurance System | Max Medical Rehab | Max Loss of Earnings | Death Benefits to Spouse | Funeral Costs | Lump Sum for Permanent Impairment | Right to Sue |
| ON | No-Fault | $100,000 $1 million if catastrophic |
$400 to age 65 Then reduced. Can buy higher limits |
$25,000 | $6,000 | nil | Subject to $30,000 deductible |
| BC | Tort | $150,000 | $300 to age 65 then reduced |
$5,000 | $2,500 | nil | Yes |
| MB | No-Fault | No Maximum | 90% for duration Of disability (max Gross-$65,000) |
$325,000 | $6,663 | Up to $124,689 |
No |
| QC | No-Fault | Different Comprehensive levels |
90% Net income Max-gross $55,000 up to Age 65 then reduced |
$275,000 | $4,142 | Up to $201,543 |
No |
| Sask | No-Fault | $5,268,450 | 90% to age 65 Then reduced (Max gross of $59,062) |
45% of net Income for life -Max gross $59,062 |
$7,903 | Up to $192,594 |
No |
| Sask | Tort | $20,600- $154,500 if Catastrophic |
$309 weekly for life |
45% of net Income for life -Max gross $59,062 |
$5,150 | Up to $139,853 |
Yes |
While both public and private auto insurance systems have their problems, it is apparent that a public system can provide benefits that are equal to, or even better than those offered by private insurers. Those who believe that auto insurance should provide a social safety net may prefer a government-run system. Conversely there are others who consider that a system that takes away choice, smacks of totalitarianism. They reject the concept of public insurance completely.
Affordable protection really shouldn't be a contest. There may even be a middle ground that may even be acceptable to both sides, which I will discuss next week.
Susan Saksida, CIP is an Insurance Consultant. Questions or comments can be emailed to insurance compliancematters@rogers.com
Feeds