The inefficiency lies in that the people who get the insurance do not value the benefits as much as it costs taxpayers to provide those benefits. Government forces Western taxpayers to work so that Quebec and the Maritimes can enjoy a style of life that thumbs its nose at economic reality. Instead of encouraging people to take precautions and spare resources the way private market insurance does, government EI encourages workers to live in places where their jobs are most at risk. The trick to getting a private market in UI going is to know the risks of unemployment that workers face. Private insurance companies could buy the excellent labour market data that Statistics Canada collects or the market could collect its own data.
Insurance companies maintain records on car accidents and fires.
There is no reason they could not do the same with unemployment figures. Private insurance companies have not waited for me to write this article to get moving. Starting in the 1980s, firms in the UK started selling unemployment insurance that would cover the costs of your mortgage if you lost your job. French banks are also getting active in this market. The premiums may cover part or all of the mortgage payment, and can stretch to 30 months.