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Saskatchewan throttles back motorcycle insurance premium increases


March 14, 2013   by Canadian Underwriter


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Saskatchewan General Insurance (SGI) announced Thursday it plans to revise its proposed premium hikes for motorcycle owners after an earlier proposal spawned a backlash against the ruling Saskatchewan Party government.

Motorcycles

“Under SGI’s revised proposal increases for motorcycles with annual rates greater than $1,000 will be capped at a maximum of 15%,” the company stated in a press release.

“Motorcycles with annual rates of $1,000 or less will be subject to a dollar cap instead of a percentage cap, with a maximum increase of $150 annually.”

The change was made at the behest of Donna Harpauer, the minister responsible for SGI, which is the P&C carrier that underwrites the insurance provided by the provincial Auto Fund.

On Feb. 15, SGI had said it would not cap increases to motorcycle rates charged by Auto Fund, which is responsible for licensing and is also the mandatory insurance program for the province.  At the time, SGI had submitted proposed rates, scheduled to take effect Aug. 1, to the Saskatchewan Rate Review Panel. Although the net proposed increase at the time was 1.03%, it proposed significant increases for some motorcycle premiums.

But this week Harpauer asked the firm to cap motorcycle premium increases, for models with annual rates exceeding $1,000, to 15%.

“We heard loud and clear from the motorcycle community that the proposed increases would cause unreasonable financial hardship for bike enthusiasts, and could negatively impact business owners who deal in motorcycle and related equipment sales,” Harpauer stated in a press release Thursday.

“We’ve asked SGI to implement caps on these hikes to reduce rate shock for motorcycle owners. We’ve also asked SGI to look at other options in terms of coverage levels and increased safety programs that ultimately will help reduce the claim costs associated with motorcycles.”

On Tuesday Premier Brad Wall suggested in a scrum that the province would need to pass legislation if the Auto Fund were to reduce the mandatory coverage for bikers. Vehicle owners who buy Saskatchewan plates must also buy either no-fault or tort personal injury coverage, in addition to mandatory coverage for liability and damage to their own vehicles.

Wall’s comments came a day after he suggested during Question Period the increases proposed in February were a mistake. NDP leader Cam Broten had asked Wall Monday during Question Period in the legislative assembly if the ruling government “is one that admits at its mistakes” and Wall replied his government had “acknowledged mistakes when they’ve happened,” and added they had “done the same thing with respect to the motorcycle rate change announcement.”

Under the Auto Fund’s no-fault option, mandatory 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 told reporters Tuesday outside the legislature.

SGI has said the expected average claim cost for motorcycle injuries is more than five times greater than that of private passenger vehicles and that motorcycle owners, as a group, pay $9 million less per year than the Auto Fund pays to cover claims and claims expenses.

“It is proposed that motorcycle rates be fully corrected to end subsidization of their claim costs by other vehicle owners,” SGI had said Feb. 15.

But then on Thursday, SGI said it will revise its proposed rate increases to incorporate the new capping guideline, and posted revised rates on its website.

“Minister Harpauer has directed SGI to review its rating approach for motorcycles, including the injury benefit levels provided in the insurance coverage, and to examine ways to improve motorcycle safety programs,” SGI added Thursday.

“Under the revised proposal, about 63% of vehicles would receive rate increases and about 37% would receive decreases or have no change to their rates,” SGI stated on its website this week.