Auto Insurance

As rates fall, Saskatchewan shows public car insurance can work

By: Jessica Mach on July 24, 2018

Auto insurance is about to become cheaper in Saskatchewan — even as rates continue to climb nearly everywhere else in the country.

Saskatchewan Government Insurance (SGI), a government-run company that holds a monopoly over the province’s auto insurance industry in addition to selling property and casualty insurance, is preparing to apply for a rate decrease later this year. The application will be presented to the Saskatchewan Rate Review Panel, which will assess how a decrease would impact both auto insurance customers and the industry-at-large.

SGI plans to ask for an overall decrease in rates, but the company has not yet provided exact numbers. Earlier in July, SGI president and CEO Andrew Cartmell said that customers could expect decreases of a few percent.

Last week, the company told Canadian Underwriter why a rate decrease was possible: strong investment earnings in 2017 and 2018. In July, the Saskatchewan Auto Fund, the auto insurance arm of the SGI, posted investment earnings of $162.8 million for this period.

These profits will be used to benefit Saskatchewan’s drivers, via lower rates.

Saskatchewan is one of three provinces in Canada where drivers are required to buy auto insurance from a public company. The other provinces are Manitoba (Manitoba Public Insurance) and British Columbia (Insurance Corporation of British Columbia).

In recent years, ICBC has come under fire for its sky-high auto insurance rates. In 2018, B.C. overtook Ontario as the province with the highest rates in the country.

A number of critics have blamed B.C.’s expensive auto insurance on the province’s public auto insurance system, which bars private insurers from competing for customers. This lack of competition, critics argue, means that ICBC has no incentive to keep prices low or improve its services.

Perhaps the most vocal of these critics is the Insurance Bureau of Canada (IBC), a lobby group that represents most of the private insurers in Canada. Last week, IBC ramped up its campaign against ICBC, arguing that its monopoly on B.C.’s auto insurance industry is also the reason that ride-sharing options are not yet available in the province.

Is IBC right that public auto insurance simply doesn’t work? When you look at the example of B.C., the answer seems clear. But what about Manitoba, where premiums are substantially lower than they are in provinces that have private auto insurance industries, like Ontario and Alberta? And what about Saskatchewan, where premiums are actually set to decrease?

In both cases, public auto insurance seems to be working just fine.

It’s clear that something’s wrong at ICBC. But to pinpoint the public insurance model as the problem just doesn’t seem to line up with the facts.