Session 1 – Operation of the Auto Insurance
System in Canada’s Provinces
Marie-Hélène Malenfant, FCIA, FSA Director of actuarial liability valuation, SAAQ
No-Fault System in Québec
Before 1978
28% of injured were not compensated;
2 to 10 years of payment delay;
High legal fees; and
Rising premiums.
Government adopted the no-fault system
1978 implementation of tort law for property damage and
bodily injury
No-Fault System in Québec
1978 implementation of no-fault system
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SAAQ
• No-fault bodily injuries
• Compulsory coverage
• Benefits defined by law
• Based on economic
losses
Private Insurers
• Tort system for collision
and property damage
• Minimum compulsory
coverage
• Direct compensation to
the insured
No-Fault system in Québec
Benefits defined by law to compensate the losses:
Income replacement indemnity
First 2 years after the accident, start after a 7-day waiting period, and paid every 14 days. Start on the 181st day after the accident for the unemployed at the time of accident.
From the 3rd year on, the income replacement is adjusted with a determined employment compatible with their abilities. Benefits end at age 68.
Relapse possible.
Treatment expenses for care and rehabilitation
Personal home assistance, job training and profession reintegration expenses, medication, etc.
Lump-sum compensation for non-pecuniary damage
Compensation for loss of enjoyment of life, mental suffering and pain
Death benefits
To a surviving spouse, for funeral expenses, etc.
No-Fault System in Québec
Examples of benefits:
Income replacement indemnity: 90% of the net income computed on the basis of a gross annual income not exceeding the maximum insured salary of $69,500
Lump sum to surviving spouse: $67,340 to $347,500
Funeral expenses: $5,046
Non-pecuniary damage: maximum of $236,131
Home care expenses: maximum of $843/week
Lump sum indemnity for students: $5,046 at elementary, $9,260 at secondary, and term at post- secondary school level (up to $18,519/year)
$55/ physiotherapy treatment (effective September 24)
$36/occupational therapy
$86.60/psychological treatment
Medications: 100% on presentation of bills or receipts
Review of the benefits will be completed in the near future
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No-Fault System in Québec
Subrogation right
Abolition of lawsuit based on responsibility in a car accident
All Québec residents are covered here and around the world
Québec resident having an accident outside province of Québec
Non-Québec resident having an accident here in Québec*
* Québec has agreements with Manitoba, Alberta, and Ontario (limited to non-pecuniary
damages).
No-Fault System in Québec
Subrogation statistics
Accidents in Canada (excl. Québec)
200 cases with possibility of subrogation
2/3 from Ontario, Alberta, and Manitoba (agreement)
Accidents in U.S.A.
200 cases with possibility of subrogation
70% cases are accidents in FL, ME, NY, VT and NH
SAAQ recovers 30-35% depending of the insurance coverage (1/3 lawyers)
Accidents outside Canada and U.S.A.
100 cases with possibility of subrogation
Vacation spots (Mexico, Cubs, etc.), France
Usually those people from vacation spots have no insurance coverage
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No-Fault System in Québec
Subrogation calculation : 2–4 cases/year
Past indemnities
Accumulated with interest
Future indemnities
Best estimate of future payments
Doctor’s opinion on the deterioration of the victim’s condition
Subject to laws of the jurisdiction where the road accident occurred
4320.04 – The assumptions and methods used by the actuary should take account of the circumstances of the work, including applicable law, regulation, court practice, and established legal principles relevant to the work.
No-Fault System in Québec
A little history!
Law modifications in 1990 and 2000 for benefits
Creation of the insurance fund (trust) in 2004
First underfunding position in 2004: Action Plan
Expenses related to the injured in a year are larger than the income
($500M)
Premiums should be increased ($300M)
Road accidents reduction ($130M)
Costs reduction ($70M)
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No-Fault System in Québec
Premiums increased
Increase in 2008
Very far from the risk because it was the same amount as 1985
Increase over a 3-year period to fill in 60% of the shortfall
Annual indexation
Spreading of payments was offered
Annual driver’s licences
Now the premiums are revised every three years
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No-Fault System in Québec
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15 000 20 000 25 000 30 000 35 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Number of people with benefits
Year of accident
No-Fault System in Québec
Cost reductions
Risk management of claim processing
Process revisions
Management of the invalidity period
Services better adapted to the situation
No-Fault System in Québec
We overachieved the goal
The new pricing done last year will provide decrease in
premiums starting in 2016.
Capitalization and financing of the accident year: CHECK
Decrease in number of deaths and injured persons
Even though there is an increase in delivering driver’s licenses and car
registration
Better services to those who claim compensation
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Benchmarking*
Comparing with similar Qc organizations and three other
provinces (BC, Manitoba, and Saskatchewan)
Capitalization rate: 3/5
Administration costs per $1 benefit: 1/5
Comparing with other Canadian provinces
