The Saskatchewan Rate Review Panel has completed its review of the recent two-tiered rate hike proposal and recommended one hike remain and the second in 2027 not be approved.
The Panel recommended that the provincial government confirm the Saskatchewan Auto Fund’s (SAF) interim overall rate increase of 3.75 per cent, which took effect June 1, 2026.
The Panel is not recommending approval of the second proposed 3.75 per cent increase for June 1, 2027, at this time.
SAF, which is administered by SGI, applied for a two-year rate program with overall increases of 3.75 per cent effective June 1, 2026, and June 1, 2027. The first increase was implemented on an interim basis while the Panel completed its review.
Saskatchewan Rate Review Panel Chair Albert Johnston said they declined to give an opinion on the June 1, 2027 increase until they receive additional information.
“In the terms of reference (it) says that SGI is supposed to provide us information or updated financial information on November 1,” Johnston said.
“Now we have asked for not only financial information, but a plan including any other initiatives that they’re going to take to hopefully get the Auto Fund back on financial stability because they’ve lost money the last four years.”
Johnston said projections show the Auto Fund would still have losses even if the second rate increase was approved.
“It is difficult to say whether we’re going to get all that information by November 1, but we’ll wait and see what happens. But that’s really the essence of what we’re doing now,” Johnston said.
The proposal would result in an average annual increase of approximately $38 in the first year, or about $3 per month, although individual customer impacts will vary depending on vehicle class and rating factors.
Johnston said that they use consultants to help them review the information they receive from the Auto Fund or SGI.
“The consultants ask a whole series of questions related to what they’ve been presented with and then they issue a report to us. Now we’re involved in the process along the way and then they issue their report making the recommendations that they think the panel should make. We then take all information along with the input from the public and we make a determination as to whether we can say these rates are fair and reasonable,” he explained.
After reviewing the application, public input, updated financial information and the report of its independent technical consultants, the Panel concluded that the first rate increase is necessary, justifiable, and step in the right direction.
The Panel found that SAF’s costs have increased significantly due to higher damage claim costs, inflation, more complex vehicle repairs, rising vehicle values, weather-related losses and increased operating expenses. At the same time, premium revenue has not kept pace with projected claims costs and expenses.
Johnston said that they recommended that SGI consider a further rate increase of 6.5 per cent as a way to rebuild capital in reserves.
“We haven’t heard back from them on that and I assume that they will, be making an announcement, sometime in the future here,” Johnston said.
In 2022, the SGI Auto Fund Rate Stabilization Reserve (RSR), had more than a billion dollars and SGI issued $100 refunds to all vehicle owners.
“Now it’s headed down to … to $171 million, so it has significantly been depleted,” Johnston said. “Effectively they’re using their surplus to keep rates low, which in our view doesn’t really make long-term sense.”
SAF’s Minimum Capital Test (MCT) is also forecast to fall below both its approved policy target and its internal minimum without corrective action.
The Panel also made several other recommendations, including that SAF adopt a capital margin of at least 6.5 per cent effective immediately and commit to reaching the full current forecasted 9.2 per cent.
The mandate of the Panel is to review rate applications and provide an opinion on the fairness and reasonableness of the requested rate adjustments, considering the interests of the customer, the Crown corporation and the public.
The recommendations will be reviewed by the government, and a final decision on implementation will be made by Cabinet.
Government and opposition react to Panel
In a statement emailed to the Daily Herald, Minister Responsible for SGI Jeremy Harrison agreed with most of the panel’s thoughts on the rate hikes.
“The Panel confirmed that financial pressures on the Auto Fund are real and require attention, but it also highlighted the importance of affordability. We will take the time to review the report and ensure any future decisions strike the right balance between protecting ratepayers and maintaining a strong, sustainable Auto Fund,” Harrison said.
Official Opposition NDP Shadow Minister for SGI and Highway Infrastructure Darcy Warrington said in a statement that he was glad that the Rate Review Panel is recommending against the 2027 rate hike.
” It is a much-needed break for consumers who are struggling with the cost-of-living crisis that Scott Moe and Jeremy Harrison have created. This ruling reflects in part what Carla Beck’s team has been saying from the beginning — that the Sask. Party doesn’t care about the affordability of Saskatchewan drivers,” Warrington said.
Warrington accused Harrison of mismanaging SGI to the point where only billing Saskatchewan drivers will maintain the sustainability of the auto fund.
“The biggest threat to the auto-fund and SGI right now is Scott Moe leaving this incompetent Minister in charge of this critical Crown corporation. We are demanding that Jeremy Harrison commit publicly today to following the recommendations of the panel and not imposing the second SGI rate hike,” Warrington said.
“Until he stops hiding and faces the media and makes this commitment, Saskatchewan drivers have every reason to suspect that Harrison and Moe will try and hike the rates again under the cover of darkness.”
Michael.oleksyn@paherald.sk.ca
