SAINT JOHN, NB, Nov. 28, 2003 – The Centre for Spatial Economic and Shift Central Inc. released a study today which shed new light on the debate around Public vs. Private Auto Insurance. These are key findings that need to be taken into account in further discussions.
A government-run auto insurance system in New Brunswick would have significant negative effects on the provincial economy and the government’s fiscal position, according to the study.
The negative effects include a net loss to the real GDP of $64 million per year and the loss of more than 800 jobs. In addition, the report suggests that the provincial government would be saddled with lower tax revenues, a drop in its budget balance of $17 million on average, over the first decade and start-up expenditures in the first year of operation of $102 million.
The report was commissioned by Insurance Bureau of Canada on behalf of brokers, agents and insurers of New Brunswick. IBC also commissioned the Moncton-based research firm of ShiftCentral Inc. to review the methodology and the data for relevancy to New Brunswick.
Mario Th�riault, CEO of ShiftCentral, told members of the Saint John Board of Trade today that a government-run auto insurance system would result in short-term economic benefits realized in the start-up year due to government investments in real estate, equipment and overhead, and that the city in which the head office was situated would see a net increase of 232 jobs.
“This debate needs to be built on facts,” Mr. Th�riault said. “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,” he added.
Half of the 833 jobs lost would be insurance related and the other half would be lost from other sectors of the economy. In addition, a government-run system would have a particularly harsh impact on rural New Brunswick. Under a government system small rural communities in New Brunswick would lose 61% of overall jobs. Outside the head office city, women would suffer more job losses than men since more than 73% of the people employed in the insurance industry in New Brunswick are women.
The study also evaluated the impact of a Quebec-style mixed system. In Quebec, private companies and the government provide different aspects of auto insurance. Private companies take care of property damage coverage while the government delivers health care related coverage. Adopting a mixed system in New Brunswick would result in even greater job losses than government-run system with 1,100 jobs lost in the first year and an average of 1,980 over the first 10 years of operation.
Mr.Th�riault concluded that the combination of reduced government tax revenues, high start-up expenditures and job losses throughout the province make it clear that a government-run auto insurance system would have an overall negative impact on the provincial economy.
Peter Johnson, President of Insurance Brokers Association of New Brunswick (IBANB), said although the study addressed the provincial and regional economic impacts of government-run insurance, only the provincial findings were released today. “Early in the new year, as brokers, we will be sharing this information with every community in which we work and live.”
The impact will be dramatic in some regions, Mr. Johnson continued. “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,” he said.
The Centre for Spatial Economics (C4SE) monitors and forecasts economic and demographic change throughout Canada at virtually all levels of geography. The C4SE has developed extensive historical databases and national, provincial and small-area economic-demographic models covering all of Canada. The company also prepares customized studies on the economic, industrial and community impacts of various fiscal and other policy changes, and develops customized impact and projection models for in-house client use. Clients include federal and provincial government departments, crown corporations, manufacturers, retailers and real estate developers. The Centre for Spatial Economics (C4SE) recently completed an analysis entitled “Newfoundland and Labrador: Towards an Assessment of the Benefits of the Canadian Economic Union”, commissioned by the Royal Commission on Renewing and Strengthening Our Place in Canada.
ShiftCentral is a privately held firm based in Moncton, New Brunswick, specializing in competitive intelligence and research for corporate and government clients. A leading provider of outsourced competitive intelligence (CI) services, the company uses cutting-edge technologies and the best analysts to provide information and knowledge services. Its growing client list includes BMO Mutual Funds, Aliant Telecom, Emera, Atlantic Lottery Corporation, Atlantic Canada Opportunities Agency, Enterprise Greater Moncton, Greater Halifax Partnership, Human Resources Development Canada, Industry Canada, Cossette Communications, Innovatia and Alcatel.