SGI losing $10 million annually on motorcycle insurance
Insurer states that rate cap removal a necessity to make up for shortfall
“We incur about a $9 to $10 million loss annually,” Don Thompson, vice-president of product management at SGI, told Canadian Insurance Top Broker.
Every other vehicle group, he says, pays 1% more in their rate to subsidize that loss.
To make up for this shortfall, SGI has proposed removing the cap on motorcycle rate increases.
The Saskatchewan Rate Review Panel is examining the proposal and, if passed, motorcycle drivers in the province could see an average rate increase of 73% as soon as August 31st.
Motorcycle enthusiasts are, understandably, upset.
“We’re taking a lot of heat [from consumers],” says Thompson, who admits that brokers will have to deal with many unhappy customers.
Garth Neher, president of the Insurance Brokers’ Association of Saskatchewan (IBAS), says his organization always has concerns when consumers are faced with major rate increases.
“But on the other hand,” he says, “SGI is in charge of setting their rates.
“At the end of the day, we have to trust that SGI has actually studied their numbers and that they have the facts to rationalize what they’re proposing.”
Both Neher and Thompson stress that this is just a proposal.
“At this point in time, they’re presenting the rate proposal. It’s not automatic that it’s rubber-stamped,” says Neher.
Whether the rate cap removal is approved or not, Thompson stresses that something must be done to ensure every vehicle group is paying a fair rate.
“We’re trying to price this product to break even. We’re trying to have each rate group pay their right rate so there is no cross-subsidization. That’s all we’re trying to do here.”