Saskatchewan brokers should be prepared for motorcycle enthusiasts to register their “sticker shock” when Saskatchewan’s government insurer hits them with huge premium increases.
SGI has submitted a rate proposal to the Saskatchewan Rate Review Panel (SRRP) that, if approved, would mean rate increases of 57.6% for cruiser/touring motorcycles, 128.7% for sport motorcycles, and 73.6% for dual purpose and other forms of motorcycles.
Motorcyclists will not be happy with the proposed new motorcycle rate hikes for 2013 – and brokers will be caught between the angry motorcyclists and the government insurer. Although there may be a grace period while Saskatchewan is still knee-deep in snow.
“I think this will start coming to the fore once the weather starts to break and the snow starts to disappear and people start to get [their motorcycles] going,” said Phil Casey, a manager at Conexus Insurance Ltd. in Saskatchewan. “And then reality will hit: motorcycle owners will start to get their insurance, and then they are going to say: ‘Gee that’s a little bit crazy.’”
SGI's proposal will mean an increase across the board for all vehicles, amounting to an overal general increase of 2.27%. But whereas vehicle rate increases will be capped, motorcycle rate increases will not be capped. That will mean a big increase of motorcycle premiums for some riders.
For example, the average current premium for 2011-13 touring bikes with engine capacities of between 401 and 750 c.c. would be bumped up from $1,428 to $1,817. And SGI is proposing that 2011-13 sport motorcycles with similar-sized engines be bumped up from $1,963 to $3,785.
And so why did this happen, and what your clients can do about it?#pb#
In its materials to the rate board, SGI said that “injury claim costs for this class are extremely high” because of a motorcyclist’s lack of protection. Whereas injury costs make up approximately 25% of the total required premium for non-motorbikes, motorcycle injury costs account for approximately 80% of the required average motorcycle premium.
“As a group, motorcycle rates are substantially lower than what is required to cover their claim costs,” SGI said in a statement. “The shortfall is currently subsidized by other vehicle owners. SGI is recommending that no caps be put on motorcycle rates so they can be brought to a break-even point through this rate program.”
One way to deflect the anticipated flak from the public would be to advise motorcycle riders to consider a short-term registration, instead of a full 12-month compulsory registration, with an extension to cover the motorcycle when it is in storage, suggests
“You don’t have to register that particular motorcycle for a 12-month period,” said Casey. “You could say: ‘I only want to register it for six months, to look after it during the season.’ Your premium drops down [by half] pretty quickly.”
Casey said motorcyclists opting for this solution can also buy extension insurance from a broker to cover any damage to the vehicle while it is being stored during the unlicensed period.
“There is still some protection, at whatever deductible they feel fit to pay, to look after the storage when the motorcycle is licensed and when it is licensed,” Casey said. “You’re cutting your premium for the compulsory registration just about by half.”
