Time and time again motorists in British Columbia are regaled with horror stories of private auto insurance rate hikes and reassured they enjoy the lowest premiums thanks to the government run Insurance Corporation of British Columbia. Unfortunately for the B.C. government no matter how many tales they tell a recent study separates fact from fiction about auto insurance in Canada. The report "Myths and Facts about Automobile Insurance in Canada" was prepared by former Canadian Taxpayers Federation (CTF) director Mark Milke for the Insurance Bureau of Canada.

Myth #1: Private sector auto insurance is more costly than government-provided insurance. Milke's research reveals that between 2000 and 2005, the average British Columbia premium ranged from the most expensive among the ten provinces (in 2000, 2001 and 2002) to the third highest (2003) and second highest (2004 and 2005).

The same holds true for Manitoba where the government provides auto insurance. For the past six years, insurance premiums were higher on average in Manitoba than those offered in private sector provinces like Nova Scotia and Prince Edward Island.

In Alberta the private sector, not government is in the auto insurance business. And most anecdotal reports shore up the myth that private insurance is more expensive than government. But according to the data, B.C.'s premiums were higher than Alberta in every year between 2000 and 2005 except in 2003 when B.C.'s average premium was $2 less than Alberta's.

Myth #2: Insurance quotes are the same as premiums paid. There is a reason why most of the motorists and public at large believe that private auto insurance is more expensive than government provided insurance. Reports and studies on insurance are released without full disclosure or adequate context. Milke notes one such example in his study.

The Consumers' Association of Canada (CAC) claims to estimate insurance costs in each province and then ranks them. However, the CAC simply averages insurance quotes to come up with its insurance cost figure.

What's wrong with this approach It doesn't measure actual premiums paid it merely averages quotes not insurance costs, as it purports. For those provinces that enjoy private sector competition a broader set of pricing will be available because there is also a broader selection of insurance providers and options. An average of such quotes does not provide any indicator of insurance costs.

By Milke's calculations, the CAC 2005 report exaggerated Alberta's average premium by 67.7% and Ontario's by 80.7% because of it used "quotes" and not the actual premiums paid.

Myth #3: Province to province comparisons are like apples to apples comparisons. Legal restrictions and regulations in each province affect the cost of providing insurance. Milke's report also notes that the relative wealth of a population, type of optional coverage purchased, accident rates, demographics all impact the cost of providing auto insurance.

This report and its findings should be mandatory reading for decision makers, ministers, consumers and media. Deciphering numbers when it comes to insurance is crucial to ensure consumers are accurately informed.

The myth of cheaper government auto insurance is just that, a myth.