- The cost of setting up a state or public insurance company is estimated at hundreds of millions of dollars. Costs include:
- taxpayer subsidies. Due to insufficient start-up funds and low mandatory premiums, all public auto insurers in Canada need subsidies.
- Reduced private sector investment. Home, auto, and business insurance companies invest directly in the provinces where they do business. Examples of direct investments include corporate stocks and bonds, as well as real estate.
Does state insurance provide better service?
No. Here are other disadvantages of a public insurance plan:
- Limited choice for consumers and questionable customer service. Public auto insurance offers a “one-size-fits-all” solution (for example, deductibles are fixed) and does not offer multi-vehicle discounts. Insurance companies compete to offer the lowest rates, strong quality of service, and a wide range of contract options.
- Lack of product innovation. Their market being captive, public insurance companies have no incentive to create new services. Private automobile insurance companies have created innovative products, such as first-accident forgiveness, replacement cost coverage, and roadside assistance.
How does private insurance work for consumers and businesses?
- The competition offers more choice and added value. Auto insurance is competitively available in most jurisdictions in North America. The majority of people trust free competition for almost every product they buy. Some provincial governments have deregulated several former state monopolies in recent years, and consumers are enjoying more options.
- Insurance rates reflect actual costs. Premiums, in a competitive environment, take into account what it costs to insure a driver. For example, auto insurance premiums are based on factors that affect the frequency and cost of claims. It is the cost of claims that defines the premium level for private insurance consumers.
- Use. Private insurance companies inject vital doses of capital, jobs, and taxes into regional economies. The private insurance industry in Canada employs nearly 118,600 people, either directly or through its support for brokerage agencies. Jobs and investment increase when more companies compete.
Life is full of risks. Sometimes these risks hit us hard: a car accident… water damage in the basement… acts of vandalism that leads to operating losses. At times like these, insurance is there to help us get back on our feet and regain peace of mind.
Without insurance, driving a car, buying a house, or starting a business would be far too risky.
Take out insurance
Private insurance companies offer many options when it comes to auto insurance, home insurance, and business insurance. The insurance representative can help you purchase the coverage that best suits your needs.
Advice on buying an insurance policy
Before buying insurance, ask questions and get the answers that will allow you to make informed decisions. See what you need to consider when buying auto, home, or business insurance.
Checklist for your contract
Specific terms, warranties, and contract terms are common to most insurance policies. By knowing how to properly read insurance policies, you can play an important role in managing your policy.
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