Regina–When everyone is told to stay home and limit travel as much as possible for a year, you would think that’s bound to have an impact on vehicle insurance claims.
It turns out, it did, but perhaps not as much as you might think. Rather, strong performance in its Saskatchewan Auto Fund Rate Stabilization Reserve resulted in SGI announcing on Dec. 26 it would pass on roughly $350 million in earnings. This will be going to the people of Saskatchewan by issuing one-time rebates to all registered vehicle owners, and also improving injury benefits for its most seriously injured customers, the Government of Saskatchewan said in a release on Feb. 26.
Of that, $285 million will be to going to registered vehicle owners. But that’s not because there $285 million less in claims. According to SGI spokesperson Tyler McMurchy, claims in 2020 were down about $100 million compared to what was budgeted for. Instead, fund was $1.35 billion at the end of 2020, and this $350 million will draw from that. Putting it into context, he said a bad hailstorm can result in $20 million to $50 million in claims in an afternoon.
“The Saskatchewan Auto Fund Rate Stabilization Reserve is in a very strong financial position due to very strong investment returns and – to a smaller degree – fewer collision claims due to the COVID-19 pandemic,” Minister Responsible for SGI Don Morgan said. “As a result, SGI will pass on these earnings to the people of Saskatchewan by issuing rebates to all registered vehicle owners and by improving injury benefits.”
Rebates to be Issued this spring
The provincial government has approved the one-time rebate of $285 million. The amount each customer receives will vary, and it will be calculated based on a proportion of vehicle premiums paid in the previous three years. Details are still being finalized, but it’s expected the average rebate will work out to approximately $285 per vehicle or approximately 26 per cent of an average annual premium in Saskatchewan.
The Auto Fund, which all Saskatchewan vehicle owners pay into via their insurance premiums, maintains the Rate Stabilization Reserve (RSR). Maintaining a healthy balance in the RSR protects customers against sudden rate fluctuations due to unexpected cost pressures. SGI said the RSR is one of the reasons that SGI customers enjoy, on average, the lowest rates for basic auto insurance in Canada and have not experienced significant rate increases, despite the rapidly rising cost of repairing today’s modern vehicles.
The amount in the RSR is heavily impacted by the performance of its well-diversified investment portfolio, SGI said. After losses last March, in the early days of the COVID-19 pandemic, the RSR experienced strong investment earnings over the past fiscal year, especially in the last quarter. This allows SGI to absorb the one-time cost associated with issuing rebates, while remaining in a position to protect customers from significant rate hikes going forward. Even with issuing the rebate, the RSR will meet industry standards to protect against unexpected cost fluctuations, SGI said.
Rebate cheques will be issued in May and sent through the mail to customers who have paid Auto Fund premiums in the past three years and are residents of Saskatchewan. Customers are encouraged to verify that their mailing address is up to date by visiting www.MySGI.ca to confirm or by contacting their local motor licence issuer.
Benefits for most seriously injured
SGI said it is also implementing two significant enhancements for customers who receive long-term injury benefits as a result of being injured in vehicle collisions.
First, customers who require assistance with daily tasks (i.e., dressing, bathing, cooking, cleaning and yard care) will see the maximum payments for those services increase to better reflect current market rates. This is expected to benefit more than 1,100 SGI customers.
Secondly, SGI customers who receive income replacement benefits from SGI and Canada Pension Plan (CPP) will no longer have income benefits from SGI reduced by their CPP payment. It is standard industry practice to reduce insurance benefits by the CPP payment. SGI said it is leading the industry by eliminating this practice, to the added benefit of its most seriously injured customers. It is estimated that this will benefit approximately 200 people.
New Democratic Party Critic for SGI Aleana Young said in an emailed statement, “With so many families and businesses stretched and struggling to make ends meet, the news of an SGI rebate is welcome news.
“But it is hard to give the Sask. Party government any credit for their cynical U-turn on this issue just months after referring to the Saskatchewan New Democrats campaign pledge as a “vote-buying scheme”.
Young continued, “In the lead up to the last election campaign, the then Minister Responsible for SGI Joe Hargrave responded to Saskatchewan NDP Leader Ryan’s Meili’s SGI rebate pledge by saying that it would drive up the provincial debt. Hargrave said at the time: ‘It’s unfortunate that the NDP plan to use SGI as sort of a slush fund.’
“While it’s positive for Saskatchewan families that the government has reversed course and will be issuing rebate cheques, we are calling on the government to work with SGI to reduce rates in a sustainable manner to make insurance more accessible in the long-term for Saskatchewan families and businesses.
“The Saskatchewan NDP Caucus team is hard at work proposing good ideas to protect Saskatchewan jobs, families and businesses. We hope this reversal shows that the Sask. Party government is willing to work with our caucus on solutions to ease the strain on people’s pocketbooks.”
In a Facebook post, NDP Leader Ryan Meili said, “Today’s reversal on SGI rebates is good for families and businesses. If it takes a U-turn for the Sask. Party government to head in the right direction, we welcome it!”
Brian Zinchuk, Local Journalism Initiative reporter, Estevan Mercury