Panel of Experts Report
Plan cannot survive without increased contributions
Québec City, June 21, 2006 - Given current underfunding of the public automobile insurance plan, fair and reasonably staggered increases to contributions must be introduced now, claims the Panel of Experts on Automobile Insurance Contributions after studying the issue for a year and consulting the public this past spring.
In its 56 page report released today, the Panel stresses the alarming state of the plan’s finances. “The plan’s primary mission—that of indemnifying road accident victims—will be compromised if nothing is done to address the issue of chronic underfunding. This is true for those currently receiving benefits, but also for all plan members, who have a right to expect compensation if they have an accident,” explained Mr. Michel Sanschagrin, Actuary and Panel of Experts Chair.
The Panel was asked its opinion on the increases to contributions that Société de l’assurance automobile du Québec had suggested. After studying the matter, the Panel has recommended changes and additions to ensure that costs are shared as fairly as possible between the various categories of vehicle users. “The interest groups consulted did not question the need for an increase per se after 20 years of no increases in SAAQ contributions (12 years for motorcycles), but disputed the rate of increase and how it was shared among plan members. We sought a middle ground to avoid ‘contribution shock’ as much as possible while still addressing the deficits that could penalize future generations,” the Panel chair noted.
Among its main recommendations, the Panel of Experts has suggested increasing SAAQ contributions starting in 2007, but staggering them over five years instead of four. The Panel also insists that plan members must know exactly what they will pay over the next three years. The Panel recommends that SAAQ convey this information to them, before tackling intended changes to its long term funding of the plan. Another key recommendation of the Panel of Experts is to begin amortizing the plan’s deficit starting in 2007. “Everyone must be made aware that despite this year’s good performance, the plan is underfunded year in, year out to the tune of $500 million, and that on top of that, it carries an accumulated deficit of $400 million. Obviously at this rate, if we don’t do something the plan’s very survival is threatened.”
The report submitted Monday to SAAQ’s Board of Directors makes 12 recommendations in all, not just on plan funding per se, but also driver’s license issuance requirements, insurance breakdown between licenses and vehicle registration, various matters relating to motorcycles, the indexing of contributions, applicable sales tax, and insurance billing methods.
In the report’s conclusion, the Panel of Experts notes that the insurance plan and its funding are tied to the number of road accidents and that safe driving can make a big difference.
Information: Sonia Corriveau
Optimum Public Relations
(418) 930-0094
Source: Pierre Noël
Communications Coordinator
Panel of Experts on Automobile Insurance Contributions
