Rate review panel recommends lower SGI rates
SGI had proposed a revenue neutral rate change, but the panel sees room for a slight decrease in rates
October 21, 2021, 9:53 am
The Saskatchewan Rate Review Panel (the Panel) has recommended the provincial government approve a decrease in rates rather than the revenue neutral rate change originally proposed by the Saskatchewan Auto Fund (SAF) in its 2021 rate rebalancing application.
SAF proposed an overall revenue-neutral (0%) rate change effective January 21, 2022, which included a 1.7% rate increase, with rate rebalancing for all vehicles; and 1.6% decrease to the capital margin for all vehicles.
After reviewing the application and public input, and receiving updated financial information, the Panel has recommended that the original rate indication calculation of 1.7% should be increased to 2.2%.
The Panel also recommended that the capital margin be further reduced from -1.6% to -3.4%. These recommendations will lead to an overall estimated reduction of 1.3% in rates, although individual customer rates will vary depending on several factors including vehicle classes.
The Panel also recommended that the proposed 15% cap for base premiums greater than $1,000 be reduced to 10% and that a scaled cap with reductions ranging from $25-$100 be implemented for base premiums up to $1,000.
The financial impact of rate capping, which is shifted to CLEAR-rated vehicles in this application, is recommended to be offset as a charge to the Rate Stabilization Reserve (RSR).
The Panel also made several other recommendations including:
• SAF develop a meaningful, formal engagement process with the province’s taxi community to resolve their industry-specific issues.
• SAF re-engage the motorcycle review stakeholder committee process with the province’s motorcycle community to resolve their industry-specific issues.
• SAF provide the completed business case and project plan for its Corporate Transformation (CT) project in its next application so that the full implications of the project on rates is apparent.
• SAF undertake an external review of the Integrated Cost Allocation Methodology (ICAM) and report back at the next rate application.
• SAF consider several enhancements to its filing standards in its next application.
The Panel’s recommendations, which follows a review of the application and other documentation, as well as input from the public, is consistent with the analysis and recommendation made by the Panel’s independent technical experts.
The mandate of the Panel is to review the application and provide an opinion on the fairness of the rate adjustments requested, considering the best interests of the customer, the Crown corporation, and the public.
"The Panel believes these recommended rates, along with its other recommendations, represent a fair balance of the affected parties," the panel said in releasing its recommendation.
These recommendations to the Minister will be reviewed by the government and a final decision on implementation will be made by Cabinet.