Without significant fee hikes in short order, the provincialauto-insurance board is in danger of becoming a financial wreck, theCanadian Institute of Actuaries says.

At a news conferenceyesterday, the actuarial association waded into the debate overcontroversial premium increases proposed for 2007 by the Societe del'Assurance Automobile du Quebec, endorsing the SAAQ position they'reabsolutely necessary for its financial stability.

The SAAQcurrently collects about $700 million a year in fees and spends $1.2billion for administration, road-safety programs and payments toaccident victims. Accumulated deficits of $500 million a year, added onto existing debt of about $417 million, are a "cancer" that must bedealt with, institute president Normand Gendron said. No privateinsurer could operate that way and stay in business, he added.

Whilethe SAAQ actually recorded a $200-million surplus in 2005, that wasbecause of an exceptional $700-million windfall from investments placedwith the Caisse de depot et placement, not because it had managed tobalance costs and expenses. It would be unrealistic to expect a returnof 17.9 per cent from the Caisse every year, Gendron said.

If the SAAQ doesn't deal now with its financialshortfalls and debt, future generations will be stuck balancing thebooks, and they may not appreciate paying rates three to six timeshigher than now, Gendron said.

TheSAAQ recently announced plans to hike rates in 2007 for everything fromlicences and registration fees to no-fault insurance. The insurance feewould go from $46 a year to $102 in 2007 and $127 in 2008. Taxidrivers, drivers with demerit points and motorcycle owners would faceeven stiffer increases.

The actuarial institute, which saidit presented its independent, apolitical position out of public concernand not at the request of anyone else, did not make specificrecommendations on the type, size or timetable of the increases. That'sfor the SAAQ and government to decide, it said.

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