In Canada, there are two distinct insurance systems: public and private. But what does that mean for you, the customer? A lot, depending on the type of coverage and service you want.

A brief overview

A public insurance program is one that is owned and run by a government. For example, the government runs the car insurance system in British Columbia, Saskatchewan, and Manitoba, while the province of Quebec manages insurance for bodily injuries. Residents in other provinces and territories have access to insurance from for-profit corporations (whether they are privately owned, publicly traded, or mutual companies).

What’s the difference?

So how are public and private insurance different? Let’s look at a list of pros and cons for each system.

Public insurance pros

Insurance systems cost hundreds of millions of dollars to establish, and governments don’t usually have the funds to start one on their own. As a result, taxpayers foot the bill in the form of start-up subsidies. But to what benefit? Public insurance offers:

  • Mandated low premiums
  • Easy to understand, one-size-fits-all solutions (such as fixed deductibles)

Public insurance cons

On the other hand, public systems are monopolies that have no competition from other companies. Without competition, there’s not a lot of incentive to provide new products, exceptional customer service, or competitive pricing. They are also able to increase rates without having to apply for a rate increase — leaving customers with no other option but to pay it. Public insurance cons include:

  • Funded by taxpayers
  • Can increase rates without having to apply for a rate increase
  • Limited policy choices

Limited benefits to the community (like jobs, taxes, etc.)

Private insurance pros

Privately owned insurers also have their own lists of benefits and drawbacks. Some pros of private insurance include:

  • Competition that helps to spark more choice and value for customers
  • New products (such as first-accident forgiveness, replacement cost coverage, and roadside assistance) to attract new customers
  • Rates based on risk factors — the lower the risks, the lower the rates
  • Benefits to communities — private insurers provide jobs and tax dollars in local economies

Private insurance cons

Naturally, there are also a few parts of private insurance that some would consider drawbacks. For example:

  • Premiums reflect the real costs of insuring (customers pay based on factors that affect the cost of claims) — if you’re a high-risk driver or homeowner, you’ll likely pay more
  • There’s a lot of choice in the marketplace — customers must do their homework and find the coverage (and price) that’s right for their situation

Getting help with public or private insurance

Whether you have access to public or private insurance, a little guidance can go a long way. If you’re in the market for home or car insurance from a private insurance company, a broker can help you steer through the waters and find the coverage that’s right for you.