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Insurance Bureau of Canada/nl/Insurance 101/Public Versus Private Auto Insurance

Public Versus Private Auto Insurance

​Public and private insurers provide auto insurance. Both compete for your business, and private insurance companies provide more options and better value. The government runs the auto insurance system in British Columbia, Saskatchewan and Manitoba. In  Quebec, the public insurer manages the insurance regime for bodily injuries only.

How Much does Public Insurance Cost?

The cost to establish a government-run or public insurance company is estimated to be in the hundreds of millions of dollars. Costs include:

  • Taxpayer subsidies. Due to insufficient startup funds and mandated low premiums, all public auto insurers in Canada require subsidies.
  • Reduced private-sector investment. Private home, auto and business insurers directly invest in the provinces in which they do business. Direct investments include corporate shares, bonds and real estate.


Does Public Insurance Offer Better Service?

No. Other disadvantages of government-run insurance include:

  • Limited choice for customers and questionable customer service. Public auto insurance provides a one-size-fits-all solution with, for example, fixed deductibles and no multi-vehicle discounts. Private insurers compete to offer the lowest possible rates, strong service delivery and a wider range of policy options.
  • Lack of product innovation. Public insurance companies have a captive market share so have no incentive to develop new services. Privately run auto insurance companies have created product innovations, such as first-accident forgiveness, replacement cost coverage and roadside assistance.

How Private Insurance Works for Consumers and Business

  • Competition delivers more choice and value. Auto insurance is purchased competitively in almost every jurisdiction in North America. Most people believe in the free market for nearly all the products they buy. In fact, some provincial governments deregulated several former public monopolies in recent years and consumers are benefiting from increased options.
  • Insurance rates reflect true cost.  Premiums in a competitive environment reflect the real cost of insuring a driver. For example, auto insurance premiums are based on factors that affect the frequency and cost of claims. It's the cost of claims that determines the premium level for private insurance consumers.
  • Employment opportunities. Private insurers provide vital injections of investments, jobs and taxes into local economies. The private insurance industry in Canada employs almost 118,600 people, either directly or through its support of a broker workforce. Jobs and investments increase when more companies compete for business.