Although it saw major investment losses in the last quarter of 2019-20, Saskatchewan Government Insurance (SGI) said that it has no immediate plans to raise its auto insurance premiums.
In a presentation of the insurer’s annual report, minister responsible for SGI Joe Hargrave said that customers can “breathe a sigh of relief when it comes to insurance rates.”
“I don’t see any increase in premiums this year at all,” Hargrave said, adding that the insurer managed to survive a downslide in its investment market due to the COVID-19 pandemic.
The pandemic caused the basic auto insurance program Auto Fund, managed by SGI, to lose nearly $200 million in investments. According to the SGI’s annual report, the Auto Fund’s rate stabilization reserve dropped by about $46.7 million over 2019-20.
In addition to offering provincial basic auto insurance in Saskatchewan, SGI also provides P&C insurance in five provinces under the SGI Canada name.
Regina Leader-Post reported that the pandemic market downturn cost SGI Canada about $40 million in investment losses – mainly from equity markets in the last quarter of 2019-20. But SGI Canada still managed to generate a return from fixed income securities, such as bonds, of about $23 million over the same period.
Despite the investment loss, Hargrave said that SGI’s Auto Fund balance remained “quite healthy.” The minister added that markets have mostly recovered in the first few months of the current fiscal year, which made up for the losses sustained in 2019-20.
However, COVID-19 is exerting pressure on the current fiscal year, SGI said. The insurer’s premium revenues are being affected by the coronavirus, as some customers are deregistering vehicles they are not driving. But on the upside, claims have dropped due to fewer vehicles on the road. Hargrave noted that both trends are likely temporary.