Claims climb, reserve falls: SGI under pressure from rising repair costs

Rising repair costs, catastrophic weather and wildfires are leading to an increase in insurance claims. As Keenan Sorokan reports, it is draining SGI reserves.

Rising vehicle repair costs and catastrophic weather events are leading to an increase in insurance claims, which is depleting reserves at SGI and causing concern.

“We are watching very, very closely the rate stabilization reserve,” Jeremy Harrison, the minister responsible for SGI, said.

“The cost per claim that is coming in, especially on the Auto Fund side, which has been significantly increasing. And that’s actually been what’s driving a lot of the pressure that SGI is under.”

The crown corporation outlined pressures facing its auto fund in its annual report tabled Tuesday. In the 2025-2026 fiscal year, SGI reported $1.2 billion in net claims.

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 is being challenged recently as inflation and advanced technology in newer vehicles are causing sharp rises in the cost of vehicle repairs.

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.

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Despite raising insurance rates by 3.75 per cent on June 1, and deductibles for most vehicles increasing from $700 to $950 on Jan. 1, 2027, reserves are losing money.

“We can’t rectify the sustainability with rate alone,” SGI CEO Penny McCune said. “So internally, we’re looking at a lot of alternatives to reduce expenses and increase revenue.”

The rate stabilization reserve stood at $927 million at the start of the 2025 fiscal year. Two years later there is now $634 million in the reserve, with a reduction of $93.3 last year.

From working with auto body shops to reuse parts, to launching a new software system intended to find added efficiencies and flag fraudulent claims – McCune says everything is on the table to reduce claims and stem the financial losses.

“It’s about looking internally to reduce expenses and find alternate ways to find revenue,” she said.

The hailstorm that went through Regina on June 9 isn’t helping matters.

McCune says it’s the most expensive hailstorm to ever hit Saskatchewan with 13,000 claims filed for an estimated $100 million in damage, and more expected claims in the weeks ahead.

“We do have reinsurance that we buy for events like this. It’s likely to hit our reinsurance layer on this one,” she said.

On the property side, SGI Canada – which is separate from SGI – also saw a big increase in claims driven by extreme weather and a historic wildfire season.

Catastrophe claims increased from $32.3 million in 2025 to $120.3 million in 2026.

Thirteen catastrophic claims events were identified across the prairies in 2025-26, compared to only five the prior year, according to SGI Canada’s annual report.

Despite the cashflow concerns facing both SGI and SGI Canada, McCune says it won’t leave its northern customers without insurance, like other private companies.

“There are other competitors that are removing themselves from the wildfire areas,” she said. “They see it as great risk. We won’t do that. We’re here to support the people of Saskatchewan.”