Saskatchewan Government Insurance (SGI) is pointing to a sharp rise in repair costs for increasingly complex vehicles as it seeks to raise basic auto insurance premiums by a cumulative 7.6% over the next two years.
At a public consultation meeting in Regina, SGI vice president of corporate actuary Chris McCulloch said inflation in both materials and labor, combined with more sophisticated vehicle technology, has materially increased average claim severities.
“Newer vehicles have advanced technology, sensors and specialized materials and even minor repairs [are] significantly more expensive,” McCulloch told attendees.
According to SGI figures, the average cost of damage claims under the Saskatchewan Auto Fund has climbed 25% in five years, from $4,880 in 2019–20 to $6,101 in 2024–25. Those higher severities, alongside broader cost pressures, have produced what SGI described as a funding “shortfall” for the Auto Fund, which provides basic, universal coverage for collision damage and personal injury.
According to a report from Regina Leader-Post, SGI is proposing a phased approach to the rate change. An interim 3.75% increase is slated to take effect June 1, 2026, followed by another 3.75% on June 1, 2027. Compounded, the two steps equate to an overall rise of just over 7.6%. For most passenger vehicles, the first phase would add an average of about $38 per year, with motorcycle and taxi rates to be set after further consultation.
Across the basic book, SGI estimates the two increases would generate roughly $85.5 million in additional revenue for the Saskatchewan Auto Fund over two fiscal years. The fund is self‑sustaining, meaning, it does not receive money from the provincial treasury and does not remit dividends back to government, but instead relies on premiums, investment income and a Rate Stabilization Reserve (RSR) to absorb volatility.
As of Dec. 31, 2025, SGI reported an RSR balance of $673 million. Executives have said the target should be closer to $900 million, given current loss‑cost trends and the need to withstand large‑loss years without abrupt rate swings. That gap of around $227 million highlighted the extent to which recent cost inflation has eaten into the fund’s buffer.
The proposed hike has also revived debate over SGI’s decision to rebate $374 million to policyholders in 2021–22, when COVID‑19 lockdowns and reduced driving led to a significant drop in collisions. Saskatchewan NDP MLA Darcy Warrington, the opposition critic for SGI, argued after the Regina meeting that, in hindsight, the rebate may have been overly generous, given that premiums are now set to rise.
“Did it need to be $374 million? Maybe it could have been $200 million. Then they would have had another $174 million kicking around. We need to find a balance,” Warrington said.
SGI president and CEO Penny McCune defended the Auto Fund’s structure and mandate, emphasizing that its goal is to break even over time and maintain sufficient reserves to pay claims without relying on taxpayers. She added that management is not looking solely to premiums to restore the RSR.
“Besides rate increases, we are looking at quite a number of options on how to reduce expenses and increase revenue in other ways, so we don’t want to put it all on rate [to] the customers,” McCune said.
SGI’s filing reflects trends seen across Canadian and US auto markets. Nationally, Canadian P&C insurers have reported auto physical damage claim costs rising well ahead of general inflation since 2020, driven by parts shortages, higher labor rates, more frequent write‑offs and the spread of advanced driver assistance systems (ADAS) and sensors into mass‑market vehicles.
Industry data from the Insurance Bureau of Canada and the General Insurance Statistical Agency indicated that, even where collision frequency has normalized or remained below pre‑pandemic levels, severity increases have kept loss ratios elevated. In some provinces, average repair bills for late‑model vehicles are now 30% to 40% higher than in 2019, particularly for front‑ and rear‑end impacts that require recalibration or replacement of radar, cameras and lidar.
Saskatchewan’s basic system — which bundles injury benefits, liability and physical damage into a single public Auto Fund — means those pressures feed directly into SGI’s required rate level. Unlike private‑market provinces, where carriers can adjust underwriting appetite or shift mix by segment, SGI must maintain universal coverage, leaving premiums and expense management as its primary levers.
At the same time, Saskatchewan’s experience differs from that of British Columbia and Manitoba, where public insurers have recently been able to hold or reduce basic rates after introducing no‑fault injury models and tighter cost controls. SGI has not undertaken a comparable structural overhaul on the injury side, so its current application is focused squarely on catching up to cost inflation rather than banking major system savings.
The Saskatchewan Rate Review Panel, an independent body appointed by the provincial government, is reviewing SGI’s proposal. Its remit included assessing the actuarial justification, taking public submissions and considering the findings of an external consultant before making recommendations to Jeremy Harrison, minister responsible for SGI.
The public has until April 20 to submit feedback via saskratereview.ca, with the panel expected to report by June 18.
A smaller‑than‑requested increase would slow the rebuilding of the RSR but ease short‑term affordability concerns; a full or larger approval would strengthen the fund’s balance sheet but add to cost pressures for households and businesses already grappling with higher borrowing and living expenses.
The consultation also comes against a broader backdrop of scrutiny on public auto insurers. In British Columbia, ICBC’s financial swings and policy changes over the past decade have fueled repeated reviews of its basic rate structure and reserve management, while Manitoba Public Insurance has faced governance and rate‑setting controversies of its own. In that context, SGI is under pressure to demonstrate that its pricing, rebate decisions and reserve targets are grounded in consistent, transparent actuarial principles.
For the wider Canadian market, Saskatchewan’s experience underscores the difficulty of matching rates to rapidly evolving vehicle technology and repair economics, even in a monopoly basic system. As ADAS and electrification continue to proliferate, insurers will likely face ongoing tension between maintaining price adequacy and keeping auto coverage politically and socially sustainable.
