Canadian Underwriter

Decision on motorcycle premiums looming in Saskatchewan

March 13, 2013   by Greg Meckbach, Associate Editor

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Saskatchewan General Insurance (SGI), the government-mandated auto carrier in the province, may submit an amended application to the Saskatchewan Rate Review Panel for increases to motorcycle premiums, while Premier Brad Wall suggests legislative changes may be needed if bikers want the option of reducing their premiums by declining income replacement coverage.


“SGI will be making an announcement about this later this week,” an SGI spokesperson stated in an e-mail to Canadian Underwriter.

Over the last month, the Saskatchewan Party government has been getting pushback from motorcycle policyholders. On Feb. 15, SGI announced it had submitted a proposal to the rate review panel for a net increase of 1.03% to the Saskatchewan Auto Fund rates, though premiums for some motorcycle categories could double.

The Auto Fund is Saskatchewan’s mandatory insurance program (which also does vehicle registration and licensing) while SGI Canada is the P&C carrier that underwrites the insurance. All owners purchasing Saskatchewan plates must buy a minimum amount of coverage from the Auto Fund.

SGI said last month it proposes not to cap increases to motorcycle rates, adding at the time that motorcycle owners “are paying less than needed to cover their claim and expense costs” and that the shortfall is more than $9 million.

“The government has the option to amend the application and we’re canvassing the options there,” Wall said during a scrum Tuesday. “I’m not going to announce anything today because (no amended application is) ready but … you’ll see, I think, before the week’s out, we should have a decision and some specifics around amending the application.”

Premiums for motorcycles differ depending on whether it’s sport, cruiser/touring, dual or other purpose. They also depend on model year and engine capacity.

For example, in the cruiser/touring category, for 2011-13 models with an engine capacity of 100 cubic centimetres and less, the current annual rate is $270. The rate SGI proposed last month to take effect this August would have been $353. For sport bikes with engine capacities of 751 to 1,100 CCs, the current rate for 2011 to 2013 models is $2,137 and the rate SGI proposed last month to take effect this August was $4,417. Under the Safe Driver recognition program, policyholders could potentially save up to 20%.

SGI says the expected average claim cost for motorcycle injuries is more than five times greater than that of private passenger vehicles.

“As a group, motorcycle rates are substantially lower than what is required to cover their claim costs,” SGI stated in a press release Feb. 15. “It is proposed that motorcycle rates be fully corrected to end subsidization of their claim costs by other vehicle owners.”

Wall suggested during the scrum Tuesday that SGI could amend its application for motorcycle rates.

“We’ve heard pretty loud and clear from people who understand that we have an issue to deal with in terms of the $9 million gap between coverage — the potential liability and the premiums, but I think there needs to be a reasoned approach, and we need to look at all the options that we need to get to the point we need to get to.”

Wall added Tuesday there would need to be a change in legislation if the Auto Fund were to reduce the mandatory coverage for bikers.

Vehicle owners purchasing Saskatchewan plates have a choice of purchasing either no-fault or tort personal injury coverage, and must also buy coverage for liability and damage to their own vehicles. Under the no-fault option, personal injury coverage includes, for those deemed unable to work, 90% of net income before the collision.

“The options are in the long term, we probably need legislative change if we want to give those who ride the chance to sort of forego some coverages, for example, insuring their earnings,” Wall said Tuesday. “That’s a big, big cost here, so if we do that, that needs legislative change. So what do we do in the meantime?  If there is to be an amended application, we will contemplate both things, both what we do now to prevent this rate shock, but also what we do long term to provide more options to riders and still respect the Auto Fund and others who don’t want to subsidize any other class of drivers.”

Wall’s comments in Tuesday’s scrum were in reply to a question from a reporter asking him to elaborate on “news to come this week” on motorcycle premiums.

On Monday, NDP leader Cam Broten asked Wall during Question Period in the legislative assembly if the ruling government “is one that admits at its mistakes.”

Wall replied that his government has “acknowledged mistakes when they’ve happened,” adding:  “We’ve done the same thing with respect to the motorcycle rate change announcement, and there’ll be more on that coming forward.”

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