Andrew Paulley - PhD Student in Economics - University of Toronto

Not exactly a sexy industry, but one that many Canadians participate in. In Canada, automobile insurance is a 10s of billion dollars-a-year industry, where anyone who wants to drive on public roads are required to hold some level of insurance protection. Each province and territory in Canada regulates their industry differently, and those differences may in part explain the vast disparity in auto insurance premiums from coast to coast to coast. The Canadian Property & Casualty Insurance industry that sells auto insurance has a national lobby, and has had substantial success in fostering legislation to lower the claim amounts they are required to pay out to consumers without setting lower premiums. Given the size of the Canadian market, even a small proportion of savings not passed onto consumers can, over time, add up to billions in additional markups for the industry with clear consumer welfare implications. It is therefore important that regulators are able to gain insight into the operations of companies providing auto insurance, and hold them to the desired level of profitability.