How SGI’s expansion into Ontario auto fared last year

Saskatchewan’s government-owned insurer has been blindsided by its Ontario auto line.

Regina-based Saskatchewan Government Insurance (SGI) reported Tuesday that SGI Canada’s 2018-19 loss ratio in Ontario was 91.9%, up 16.5 points from 75.4% in 2017-18. That increase was “largely due to unfavourable auto results,” SGI said in its annual report.

SGI runs both the Auto Fund, Saskatchewan’s government-run monopoly insurer, and SGI Canada, which competes with private for-profit property and casualty insurers in Ontario and western Canada.

Company-wide, SGI Canada’s combined ratio in 2018-19 was 101.7%, 5.4 points more than the 96.3% it was aiming for. “The result was adversely affected by auto losses in Alberta and Ontario,” SGI said in its annual report released July 11.

SGI Canada launched commercial property insurance in Ontario on Jan. 1, 2019. The Ontario market was previously served by SGI subsidiary Coachman Insurance, a non-standard auto insurer.

Coachman continues to focus on high-risk auto client while SGI Canada now serves the standard personal auto, personal property and commercial property markets in Ontario, SGI said Tuesday in its annual report.

Company-wide, SGI Canada reported net premiums earned in 2018-19 of $801.5 million, up from $726.3 million in 2018. SGI Canada’s fiscal year runs from April 1 through March 31.

Of SGI Canada’s $915.3 million in gross written premiums in 2018-19, $101.1 million came from Ontario, up 28.3% from $78.9 million the previous year.

Ontario’s increase was primarily due to the number of personal lines and personal auto policies written.

In 2018-19, $548.2 million of SGI Canada’s gross written premiums came from Saskatchewan, $186.8 million came from Alberta and $35.17 million came from Manitoba.

SGI Canada aims to write 40% of its premiums outside of Saskatchewan, SGI CEO Andrew Cartmell wrote in the annual report. The intent is to ensure losses in one province can be offset by profits in another.

“This healthy geographic spread of business is critical to SGI Canada’s future success, as extreme weather events escalate and impact insurers world-wide,” wrote Cartmell.

Distracted driving and higher collision repair costs some of the reasons insurers think claims costs are increasing.

Alberta has a 5% cap on rate increases, which insurers say is not sustainable.

In Ontario, the auto insurance rate approval system has come under fire from some insurers who say it’s too difficult to get rate increases approved soon enough. Insurers are hoping Ontario’s Financial Services Regulatory Authority will take a more flexible approach than the Financial Services Commission of Ontario (which FSRA replaced June 8) when approving auto rate changes, Insurance Bureau of Canada told Canadian Underwriter earlier.

In its budget document released this past April, the Ontario government released a strategy its calls “Blueprint for Putting Drivers First.”

Among the proposed reforms include a return to the $2 million limit for accident benefits for those who are catastrophically impaired. It’s also looking at possibly letting auto insurers use credit scores as a rating factor.