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Quebec public auto insurer given green light for rate hikes

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By Martin Ouellet

QUEBEC (CP) _ While other provinces have taken steps to reduce soaring private automobile insurance rates, Quebec's cash-strapped public auto insurance agency has been given the green light to go ahead with a series of rate hikes.

A council of experts appointed by the province supports the rate hikes proposed earlier this year by the Societe de l'assurance automobile du Quebec.

``It's necessary to re-establish financial equilibrium and the longer we wait, the greater the risk that a deficit will accumulate and who's going to pay for that? Future generations,'' said Michel Sanschagrin, president of the council, said Wednesday.

In their 56-page report released Wednesday, the experts support the gradual rate increases aimed at balancing the society's books by 2011.

Over the next three years, Quebecers should expect a 60 per cent increase in the cost of a driver's licence and automobile registration, from $178 to $204 for the licence and $130 to $144 for registration.

Fees for certain models of sport motorcycles will jump by more than 400 per cent, from about $276 for both licence and registration this year to $610 next year, and finally, in 2009, to $1,321.

Sanschagrin said most automobile categories will not see such a shocking increase.

``There is one category, I won't hide it, that of sport motorbikes, where the increase is significant,'' he said.

But Sanschagrin said that the same kind of motorcycles would cost $13,000 to insure across the border in Ontario.

The report also supports a $10 fee on auto insurance beginning next year and climbing to $20 in 2008 and $30 in 2009, to help the provincial agency pay down its current debt.

Under the expert proposals, the SAAQ's annual deficit would drop from $500 million today to $315 million by 2009.

Sanschagrin said rates haven't changed in 20 years.

The SAAQ has been in a spending deficit since 1982 and this year expects to take in $700 million while paying out $1.2 billion, he said.

The society's board of directors will make the final decision on any rate changes.

A couple of years ago provinces were scrambling to deal with skyrocketing private insurance costs after the issue nearly toppled the New Brunswick government.

Most Atlantic provinces and Alberta passed legislation mandating some form of rate reductions.

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Quebec public auto insurer given green light for rate hikes
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