Saskatchewan rate panel recommends smaller increase than Auto Fund proposal

The Saskatchewan Rate Review Panel (SRRP) is recommending a 4.4% overall average increase to Saskatchewan Auto Fund vehicle insurance rates, less than the 5.2% hike proposed in the application from Saskatchewan Government Insurance (SGI).

“The panel’s recommendations are based on fairness and rate stability for all the Auto Fund’s customers,” panel chair Kathy Weber said in a press release issued Wednesday.

“We look at the Auto Fund’s mandate to operate on a self-sustaining basis, with neither profit nor loss, and to minimize cross-subsidization among vehicle classes,” Weber continues.

SRRP has recommended a lower rate increase after reviewing the Auto Fund’s application for the 5.2% rate increase, which takes into account both the general rate increase and replenishment of the Rate Stabilization Reserve (RSR).

Beyond the lower rate hike, the panel suggests all vehicle classes be included in the Auto Fund’s proposed rate rebalancing, including motorcycles, which the Auto Fund had proposed to exclude from rebalancing; and rate capping be two-thirds of the level proposed by the Auto Fund.

In February, SGI submitted its proposed increase to the panel. The proposal included a 2.7% revenue increase and a 3.7% capital amount applied on top of the rate changes to help replenish the RSR, offset by a 1.23% surcharge put in place last year to replenish the RSR (effective until Aug. 30, 2014)

“The number of claims in the province continues to grow and auto body labour rates are set to increase 10% per year for the next three years,” SGI president and CEO Andrew Cartmell said in a statement at the time. “The Auto Fund operates on a break-even basis, so it is important to ensure an adequate balance in the Rate Stabilization Reserve to cushion against unforeseen circumstances,” Cartmell argued.

If the Auto Fund proposal was approved, SGI noted that about 84% of vehicles would receive rate increases (average annual increase of $49) and approximately 16% would receive decreases (average annual reduction of $12) or have no change to their rates.

Rates would be rebalanced for all vehicles, with the exception of motorcycles, the statement noted. It was proposed that all motorcycles receive a flat 2.7% increase, and the 3.7% capital amount would be applied on top of that increase. For taxis, SGI had proposed an overall average rate increase of 14.5%, plus the 3.7% capital amount.

Acknowledging the Auto fund’s work with specific public engagements and stakeholder consultations – including with the taxi industry and through the Motorcycle Review Committee – Weber notes SRRP’s report and recommendations follow an extensive review by independent technical consultants, as well as input from broad public consultations.

The report has been submitted to Saskatchewan’s Minister responsible for the Crown Investments Corporation. The provincial Cabinet will make the final decision on the rate application.