November 28, 2003 by Canadian Underwriter
A new study commissioned by the insurance industry suggests a publicly-run auto insurance system in New Brunswick could prove very costly.
The study, released by the Centre for Spatial Economic and Shift Central Inc., says such a system would be a detriment to the province’s financial position.
Among the negative effects is a net loss of $64 million to the province’s real GDP and the loss of 833 jobs half from the insurance industry and half from other sectors. Of these, 61% would be in rural locations, and more women would be impacted than men. The provincial government would also face lower tax revenues, and start-up expenses of $102 million.
The report also outlined impacts that were not negative, including short-term economic benefits as a result of investment to start-up the government operation, and 232 jobs created.
“This debate needs to be built on facts,” says Mario Thriault, CEO of Shift Central. “Any discussion around a public system needs to take into account the significant number of jobs that will be lost across all communities in New Brunswick as well as the negative repercussions on the provincial government’s financial situation.”
They study also looked at the impact of a mixed public-private system, such as in Quebec, where private companies provide property damage coverage and the government provides health-care coverage. It notes that even more jobs would be lost under such a system, totaling almost 2,000 in the first decade.
Insurance Brokers Association of New Brunswick (IBANB) president Peter Johnson says that the impact of public insurance is even more dramatic in specific regions and communities. “One northern county in this province will see half of the more than 140 currently employed as insurance brokers, agents or staff, lose their jobs. That hurts, and these communities need to know the truth.”