The Government of Saskatchewan says a recent decision by the Rate Review Panel balances the financial health of SGI with affordability concerns for drivers.

The 3.75 per cent rate increase was implemented on an interim basis on June 1.

In late July, the Saskatchewan Rate Review Panel issued its decision on the province’s proposed two-year rate increase program, recommending a 3.75 per cent rate increase for 2026 but not the same increase for 2027 – arguing that decision should be made in the usual fashion next year when it will be supported by a financial forecast and other data.

Minister Responsible for SGI Jeremy Harrison spoke to reporters in Saskatoon on Friday, responding to the decision. The minister highlighted the fiscal pressures currently being felt by the insurer thanks to a record setting year in damage claims.

“The panel’s recommendations recognize that claim costs and inflation are putting significant financial pressure on the Rate Stabilization Reserve and overall Auto Fund sustainability,” Harrison said. “Our government’s response balances those financial realities with our commitment to affordability for Saskatchewan drivers.”

The rate hike amounts to about $38 annually or $3 per month for drivers, depending on the make, model and year of their vehicle.

The Saskatchewan Auto Fund is the province’s compulsory auto insurance program, which is designed to break even over time and be self-sustaining.

That objective has recently been challenged as inflation and advanced technology in newer vehicles are causing increases of about 25 per cent in the cost of vehicle repairs over the last four years, according to SGI CEO Kent Campbell.

When claim payouts exceed premiums, SGI dips into its rate stabilization reserve, which is designed to protect customers from unexpected spikes to absorb those costs.

The province has had to dip into the rate stabilization reserve four years in a row.

“The result is it’s putting pressure on the overall financial situation and long-term sustainability of the auto fund,” Campbell said Friday.

Despite the announced hikes and the incoming deductibles for most vehicles increasing from $700 to $950 on Jan. 1, 2027, reserves are losing money.

At the end of the 2024 fiscal year, the reserve held $924.9 million. It dropped to $726.9 million in 2025. SGI said the reserve is around $660 million as of Friday.

“We are looking at every option such that we don’t need to go back to the rate base,” the minister responsible for SGI, Jeremy Harrison said.

While SGI looks to increase revenue through its investments, internal cost savings and encouraging body shops to reuse parts, it admits more than rate hikes are needed.

The Saskatchewan Rate Review Panel report was released in July, outlining its recommendations.

In the report, the panel’s consultants found insolvency risk to be an increasing concern for the auto fund.

“The panel does not interpret the evidence as indicating that (Saskatchewan Auto Fund) is immediately insolvent, but the evidence shows that (Saskatchewan Auto Fund’s) financial cushion is being depleted at a rate that creates a serious risk if corrective action is delayed,” the report said.

Harrison rejected the idea of the auto fund being at risk.

“There’s no path in front of us is going to lead to insolvency,” he said. “The government will never allow the auto fund to become insolvent.”

In 2022, there was $1.13 billion in the reserve. That spring, due to the low number of claims during COVID-19 and the strong financial position of the auto fund, SGI customers received a $100 rebate for each vehicle they had registered.

“A number of outside influences are really not predictable, which have driven some of the ups and downs within the rate stabilization reserve, so we’re not going to overreact,” Harrison said.

The review panel did not recommend a 2027 rate increase and instead called for a 6.5 per cent capital margin increase.

SGI says that would apply equally across all vehicle classes rather than SGI’s rate-setting approach, which aligns rates with the anticipated claim costs of each vehicle class.

Harrison said this would have upped the rate by 10.25 per cent, which he could not support.