Caution pays off! - The Panel of Experts releases its report on the automobile insurance contributions proposed by the Société de l'assurance automobile du Québec

QUÉBEC, July 7, 2021 /CNW Telbec/ - Today the Panel of Experts on Automobile Insurance Contributions released its report on the amendments to automobile insurance contributions proposed by the Société de l'assurance automobile du Québec (SAAQ) for 2022 through 2024.

After analyzing the  proposed amendments and holding a public consultation, the Panel of Experts has recommended that no changes be made to the insurance contributions proposed by the SAAQ with regard to the insurance contributions for purposes of financing the automobile insurance plan or the distribution of a surplus of $1.1 billion  to contributors.

"The proposed insurance contributions were determined with a view to fully finance the automobile insurance plan, as required under the Act respecting the Société de l'assurance automobile du Québec," declared Ms. Louise Dagnault, chair of the Panel of Experts. "They are also in keeping with the principle of equity, which is one of the foundations of the automobile insurance plan, and which requires that insurance contributions be determined based on the risk of being involved in an accident resulting in bodily injury for each contributor category."

"With regard to the distribution of the funding surplus, the SAAQ's surplus is sufficient to allow for a distribution without compromising the automobile insurance plan's financial health," Ms. Dagnault continued. "The SAAQ expects the funding ratio of the Fonds d'assurance automobile du Québec to be slightly higher than 125% after the surplus distribution and the updating of the insurance coverage currently under review, which is greater than the 100% to 120% stabilization corridor targeted by the SAAQ to ensure the plan's sustainability." The surplus will be distributed in the form of a two-year payment holiday applicable to driver's licences, and the Panel of Experts agrees with this measure.

However, since rates must constantly evolve to adequately reflect the accident risk associated with each contributor category, the Panel of Experts has recommended that the SAAQ carry out the necessary reviews to be able to propose more accurate insurance contributions for financing purposes during the next insurance contribution amendment process for three groups in particular:

• vehicles that provide remunerated passenger transportation. This industry is undergoing many changes further to the abolition of the taxi category. The Panel of Experts would like insurance contributions to be determined based on the accident risk of this vehicle category, notwithstanding the 15% cap on the increase in insurance contributions. According to the insurance contributions proposed by the SAAQ, the insurance contribution applicable to vehicles that provide remunerated passenger transportation will be $148.19 in 2022, which is lower than the contribution of $819.61 applicable to taxis in 2020;
• motorcycles. The Panel of Experts would like the SAAQ to examine the possibility of taking additional criteria into account when determining rates applicable to motorcycles, such as driving experience, training, and the ownership of multiple vehicles. The Panel of Experts also recommends that the SAAQ examine the possibility of distributing the cost of insuring motorcyclists between driver's licences and vehicle registration, in applying the risk principle;
• commercial vehicles other than farm vehicles, as this category comprises numerous types of vehicles with differing characteristics (this category includes nearly 600,000 vehicles).

With regard to the funding of the automobile insurance plan, the Panel of Experts agrees with the SAAQ's new funding policy, with one exception. The Panel of Experts believes that the funding policy should be amended to include a provision requiring the SAAQ take appropriate measures to bring the funding ratio back inside the stabilization corridor within a reasonable timeframe if the funding ratio diverges significantly from the stabilization corridor, and disclose the planned measures to do so.

The Panel also agrees that the process to review the financial situation for funding purposes should be completed each year instead of every three years, as has been done for the past few insurance contribution amendment cycles, and also agrees that surplus distribution be determined annually, if applicable, without obtaining the opinion of a panel of experts. The Panel of Experts deems that the 100% to 120% stabilization corridor determined by the SAAQ to ensure the sustainability of the plan remains appropriate. It also agrees with the three possible uses for a capital surplus, as well as the established priority order, i.e. adjusting insurance coverage, launching activities to promote road safety and prevent accidents, and redistributing the surplus to contributors.

Moreover, although the Panel of Experts agrees with the SAAQ amending contribution for funding purposes annually without obtaining the opinion of a panel of experts, it believes that any panel of experts created to review amendments to insurance contributions for financing purposes, which is generally done every three years, would have the mandate to retrospectively assess the SAAQ's decisions concerning the use of a surplus, including the distribution of the surplus to contributors. The population should also be invited to give its opinion on the SAAQ's management of any surplus as part of the public consultation that must be held by the panel of experts.

The Panel of Experts also looked into two additional issues as part of its mandate, i.e. road safety, including the safety of motorcyclists, and customer service. These issues may have an impact on insurance contributions.

With regard to road safety, the Panel of Experts recommends that the SAAQ continue its dialog with representatives from the motorcycle community to be able to propose, as soon as needed, appropriate measures to improve motorcycle road safety; that it implement a permanent and mandatory requalification or skills reassessment program in order to compensate for the lack of driving experience of certain motorcycle licence holders, especially motorcyclists who do not own a vehicle but who benefit from a grandfather clause; and that it ensure that licence holders inform the SAAQ, at the time of licence renewal, of any change in their state of health that could impair driving, and that health care professionals must declare any health problem that could affect their patients' ability to drive.

With regard to customer service, the Panel of Experts invites the SAAQ to continue its efforts to strengthen and simplify its procedures and review its quality control measures in order to improve compliance rates for the purposes of calculating the income replacement indemnity of road accident victims. The Panel of Experts also invites the SAAQ to pursue its efforts to expand insurance coverage, which has changed little in the past 20 years, and to continue its efforts to upgrade its information systems in order to ensure the continued improvement of its activities, in particular with respect to the evaluation of actuarial and rating commitments. 

Proposed insurance contributions and the mandate and composition of the Panel of Experts
The SAAQ tabled its proposed amendments to insurance contributions on April 30, 2021, in a discussion document entitled Proposed Insurance Contributions for 2022-2024. The mandate of the Panel of Experts, created by the Québec Government on January 13, 2021, was to review the approach taken by the SAAQ to determine insurance contributions and verify the data used in support of its proposed regulatory amendments.

As part of its mandate, the Panel of Experts was required to hold a public consultation. It received six briefs as well as twelve comments regarding various aspects of the public automobile insurance plan. Five of the six people or groups who submitted a brief agreed to present their brief to the members of the Panel of Experts during the public hearings that took place virtually on June 1, 2021.

As prescribed by the Act respecting the Société de l'assurance automobile du Québec, the Panel of Experts comprises three members representing the actuarial, financial and insurance sectors. The members were Ms. Louise Dagnault, chartered professional accountant, who served as chair; Ms. Micheline Dionne, actuary; and Mr. Guy Leblanc, attorney.

The mandate, composition and approach of the Panel of Experts are explained in detail on the Panel of Experts website (www.conseilexpert.aauto.ca). The website also includes the Panel of Expert's report and press releases, as well as all the documents required to have a good understanding of the insurance contributions proposed by the SAAQ for 2022 through 2024.

SOURCE Conseil d’experts sur les contributions d’assurance automobile

Jacques Carrière, Panel of Experts on Automobile Insurance Contributions, Telephone: [phone], Toll-free: 1-833-933-4525, Email: [email protected], Website: www.conseilexpert.aauto.ca