Saskatchewan Government Insurance (SGI) has submitted a proposal to the Saskatchewan Rate Review Panel that, if given the green light, would result in approximately 57% of vehicles with higher auto rates, while about 43% would see rate decreases or no change.
The SGI has proposed a 1.03% increase on auto fund rates and a 1.23% surcharge on rates (meant to help replenish the Rate Stabilization Reserve), which would be applied for three years, notes an SGI statement issued Friday. The net result of the rate changes, combined with the surcharge, is a 2.27% increase in revenue for SGI.
“Again this year, we see increased wages affecting injury claim costs, higher costs for auto parts and declining bond and investment yields, which all contribute to the need for increased revenue,” SGI president and CEO Andrew Cartmell notes in the statement. “The Auto Fund operates on a break-even basis and these changes are required to cover claim costs in the next rating year,” Cartmell reports.
“The proposal includes rebalancing, which would result in rate changes for almost all Saskatchewan vehicles,” notes the SGI statement. “Rebalancing helps to ensure fairness in rating. It takes into account the number of collisions and their severity, including damage, injury and liability costs, for each vehicle make and model, and ensures that each vehicle class is covering its own costs.”
For example, as a group, motorcycle rates are substantially lower than what is required to cover their claims costs. As per the proposals, increases to motorcycle rates will not be capped.
“In Saskatchewan, motorcycles are a recreational vehicle, not a primary vehicle for year-round use, and their injury claim costs are excessive,” Cartmell says. “We debated this issue, but in the end we simply felt it wasn’t fair for other vehicle owners to continue to pay more than they should in order to subsidize the rates for this vehicle group.”
Proposed rates for all vehicles can be found on SGI’s website at www.sgi.sk.ca. If approved, the rate changes would take effect Aug. 31, 2013.