SGI has submitted a proposal to the Saskatchewan Rate Review Panel (SRRP) for a net increase of 5.2 per cent to Saskatchewan Auto Fund vehicle insurance rates. The proposal includes the following components:
- A 2.7 per cent revenue increase
- A 3.7 per cent capital amount applied on top of the rate changes to help replenish the Rate Stabilization Reserve (RSR)
- Offset by the 1.23 per cent 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 cent per year for the next three years,” said Andrew Cartmell, President and CEO of SGI. “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.”
If approved, about 84 per cent of vehicles would receive rate increases (with an average annual increase of $49) and about 16 per cent would receive decreases (with an average annual reduction of $12) or have no change to their rates.
Rates would be rebalanced for all vehicles, with the exception of motorcycles. Rate rebalancing takes into account the number of claims and average cost of claims including damage, injury and liability costs, for each class of vehicle. This means each customer’s rate change would depend on the type of vehicle they own.
Motorcycle rates would not be rebalanced; instead, all motorcycles would receive a flat 2.7 per cent increase – the average required for all other vehicles – and the 3.7 per cent capital amount would be applied on top of that increase. This approach will bring motorcycle rates closer to covering the cost of motorcycle claims anticipated in the upcoming rating year.
Additionally, government has approved the proposals in the Motorcycle Review Committee report released last week. Those proposals include increased requirements for acquiring a motorcycle learner’s licence, incentives for new riders to take training, additional mandatory gear for new riders and their passengers, changes to the Safe Driver Recognition (SDR) program and stiffer penalties in SGI’s driver improvement program for all drivers and riders.
“We’re confident these initiatives will enhance motorcycle safety once implemented,” said Cartmell. “However, it will take some time for these changes to have an impact on claim costs, so in the interest of fairness to all vehicle owners, the proposed flat 2.7 per cent increase is a responsible approach to take.”
Taxis are another group with a large gap between the cost of claims and expenses, and what they pay. To address this, taxis will see an overall average rate increase of 14.5 per cent, plus the 3.7 per cent capital amount. SGI is currently consulting with the taxi industry about insurance rates, the business recognition program, vehicle requirements, claim handling and traffic safety.
Proposed rates for all vehicles can be found on SGI’s website at www.sgi.sk.ca/2014rates. If approved, the rate changes would be effective Aug. 31, 2014.
The full rate proposal will be available on the SRRP’s website at www.saskratereview.ca. Comments on the rate proposal can be provided to the SRRP through its website, its Facebook or Twitter account, or by calling toll free 1-877-368-7075 or emailing firstname.lastname@example.org