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April 07, 2006
Canadian Institute of Actuaries speaks out on premium increases announced by SAAQ
The Canadian Institute of Actuaries (CIA) held a press conference in Montreal this morning to outline its position on the decision by the Société de l'assurance automobile du Québec (SAAQ) to raise Québec motorists' premiums and on the controversy this decision has sparked.
Mr. Normand Gendron, actuary and President-elect of the CIA, and Ms. Marthe Lacroix, actuary and member of the CIA's Board of Directors, presented an unbiased and objective analysis of the issues emerging from the SAAQ's financial situation, demonstrating how the basic principles of actuarial science explain the need for a hike in premiums.
The Government of Québec is correct in stating that the SAAQ posted a surplus last year. But despite this surplus, made possible by exceptional returns on its assets, the fact remains that year after year the SAAQ has been accumulating very large funding deficits. The revenues generated by premiums paid during the year do not cover the costs incurred to compensate accident victims. This actuarial deficit is alarming, and the SAAQ has no choice but to raise motorists' premiums in response. It should be pointed out that Bill 55, which became law in 2004, requires the SAAQ to restore financial equilibrium by the year 2015 and to ensure that the plan is fully funded by the year 2020.
Mr. Gendron had this to say: "The Canadian Institute of Actuaries will not pass judgment on the number of years that the SAAQ must take to introduce the required premium increases. Financial equilibrium could, of course, be achieved more gradually than under the method proposed by the SAAQ, but what we need to realize is that the slower approach is the more costly approach, and it would place an unfair burden on future generations."
The Canadian Institute of Actuaries is the national organization of the actuarial profession. Independent and neutral, the CIA has decided to participate in the current debate in order to share its expertise and the unique perspective afforded by actuarial science, with a view to fostering a greater understanding of the complex issues involved.
Source: Daniel Lapointe, Executive Director of the CIA
(613) 236-8196, ext. 108, daniel.lapointe@actuaries.ca
Canadian Institute of Actuaries
150 Metcalfe Street, Suite 800
Ottawa, Ontario, K2P 1P1
Posted by Tom Troceen