By Derek Lothian, President & CEO, IBAS

Earlier this year, the SGI Auto Fund submitted an application for rate increases of 3.75 per cent in each of 2026 and 2027. Understandably, that ask has led to renewed questions around affordability, necessity, and value.

The basic premise of insurance is that the premiums of the many ultimately pay for the claims of the few. Similar to a mutual insurance company owned by its policyholders, the SGI Auto Fund is not designed to generate profit. Instead, it is intended to make just enough money to cover its operations and maintain an appropriate capital reserve.

For more than a decade, SGI has upheld the compulsory auto insurance program without obtaining incremental rate from customers. That is a feat virtually unparalleled in the insurance industry. It is, however, no longer a sustainable path forward.

As with any public agency or crown corporation, it is entirely fair for taxpayers to scrutinize SGI’s financial decisions. But core insurance costs are not opaque. They are a simple calculation of premiums versus claims. Unfortunately, in two of the last three years, the Auto Fund has paid out more in claims than it has generated in insurance revenue — and that is the case again through the first three quarters of the current SGI fiscal year.

It is not difficult to see why. We all feel it — costs are going up everywhere. Between December 2024 and December 2025 alone, the Consumer Price Index for passenger vehicle parts, maintenance, and repairs spiked by more than 6.8 per cent. Reducing administrative overhead will not fix that problem, either. It can only be addressed through rate increases, product changes, or a combination thereof.

If there is any criticism to level, it is that this imbalance has taken too long to correct. SGI’s Rate Stabilization Reserve now sits well below its own target threshold, which has the secondary effect of producing weakened investment returns from a diminished pool of capital.

One question often asked is: So, why then did SGI decrease its reserves by issuing customer rebates in 2021 and 2022?

It’s important to acknowledge that, at the time, the operating — and consumer — realities were very different. SGI was holding capital reserves close to 50 per cent higher than its target, the pandemic had resulted in less driving and significantly fewer claims, and the economic impacts of COVID-19 were still percolating. Although it is easy to second-guess those actions with the benefit of hindsight, it is difficult to argue in good faith that they were not wholly reasonable given the circumstances of the day.

Regardless, it does not change the situation we now find ourselves in.

Nobody likes paying more. Many consumers are already feeling stretched. The reality, though, is that, without a material shift (and soon), the Auto Fund cannot survive on its own. Getting back to a point of long-term viability will be neither quick nor easy. It will require real choices, short-term pain, and honest conversations.

We are not the only jurisdiction grappling with similar auto insurance challenges — Alberta, Ontario, and B.C., just to name a few. The good news is that Saskatchewan maintains eminently strong fundamentals, including a well-managed and well-governed crown insurer, a robust regulatory regime, as well as the most cost-effective and accessible system of distribution in Canada.

We can — and should — invite open, public dialogue on what other changes are necessary in the weeks and months ahead. In the meantime, the notion of a rate freeze is more soundbite than solution. Approving SGI’s Auto Fund rate application remains the only responsible decision.

Read IBAS's full submission to the Saskatchewan Rate Review Panel by clicking here.