August 10, 2000

SGI Proposes Rate Adjustment

Vehicle insurance premiums would go up by an average of $10 under a proposal for a two per cent rate increase SGI will submit to the province's Rate Review Panel.

"We need this modest increase to offset rising claim costs, improve fairness in vehicle premiums and to continue to reduce the deficit in the Auto Fund," SGI President Larry Fogg said.

With the proposed rate adjustment, recommended to take effect Jan. 1, 2001, 28 per cent of light vehicles would see a reduction in premium, 38 per cent would experience no change in premium and 34 per cent would experience an increase. Light vehicles make up about 75 per cent of all vehicles registered and insured in Saskatchewan.

Some premiums would go up while others would go down under the proposal because of a commitment by SGI to improve fairness for motorists by eliminating cross- subsidization of rates and basing rates on each vehicle make and model's history of claims and cost of repair.

"Even with the proposed two per cent average increase, auto insurance rates in Saskatchewan would remain among the lowest in the country," Fogg said. "The Auto Fund has proven itself to be administratively efficient compared to its public counterparts and the auto insurance industry as a whole."

The proposal reflects SGI's long-term strategy of implementing regular, reasonable and equitable premium adjustments, at a level close to inflation, to keep up with rising costs of damage claims.

"Claims represent between 85 and 90 per cent of the Auto Fund's costs, and each year claim costs increase as a result of rising repair costs for vehicles and the indexing of injury benefits.

"In addition, costs can fluctuate dramatically from year to year because of weather conditions," Fogg explains. "Good winter weather means better driving conditions and fewer collisions and claims, while severe summer storms can cause a significant increase in claims due to wind and hail. That's why it's important to build a cushion in the Auto Fund and hold it in reserve, so that wide fluctuations in the number of claims don't translate into wide fluctuations in rates for Saskatchewan motorists."

Fogg says the proposed rate increase would help to restore a positive balance in the Rate Stabilization Reserve, which carried a deficit of $62 million at Dec. 31, 1999.

For media inquiries only, contact:
Julianne Jack
SGI Communications
Regina
(306) 775-6907

For all other inquiries, call 1-800-667-8015.

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