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The History of Saskatchewan Government Insurance
A part of your community…SGI is proud to celebrate its 60th anniversary in 2005; the year of the province’s centennial.
Created in 1945, SGI has evolved into three distinct operations:
- The Saskatchewan Auto Fund, the province’s compulsory auto insurance program;
- SGI CANADA, which sells property and casualty insurance products in Saskatchewan; and
- SGI CANADA Insurance Services Ltd. (SCISL) Manitoba, Coachman Ontario and the Insurance Company of Prince Edward Island, expansion companies that sell property and casualty insurance products outside the province.
SGI continues to achieve the goals the government set out for it in 1945: to provide quality, affordable property and casualty insurance to the people of Saskatchewan; to protect motorists and their passengers with affordable, compulsory auto insurance and traffic safety initiatives; and to help diversify the economy and earn revenue for the province.
Here’s a look at how it all began.
Conditions in Saskatchewan in the ‘30s and ‘40s
The 1930s and early ‘40s were a bleak time in Saskatchewan, following the Great Depression, drought and the Second World War.
“It’s difficult for people who live in the 1970s to understand the Saskatchewan of the 1930s and ’40s,” said former Premier Tommy Douglas, at the opening of the new SGI head office in Regina in 1979. “Highest per capita debt, lowest per capita incomes. A province that hadn’t been able to borrow a dollar on the open market for over 14 years. A province which had never, since the day it was formed, paid off a single debt that had matured. A province that was paying 30 per cent of its total annual revenue for interest on its accumulated debt. This is the province which we inherited 35 years ago.”
High insurance costs were one of the serious problems plaguing the people of Saskatchewan. Between 1935 and 1944, Saskatchewan residents paid more than $50 million in premiums and received about $19 million in insurance protection. At least 90 per cent of the insurance in the province was written by companies established in Eastern Canada, so profits all went back east.
Solving these insurance problems was part of the new Co-operative Commonwealth Federation (CCF) government’s agenda when it was elected in 1944. The CCF government recognized the problems related to insurance: high costs, heavy involvement of out-of-province companies, the fact that fewer than 10 per cent of Saskatchewan licensed vehicles were carrying any form of insurance and the need for a compensation plan for victims of auto accidents. The government saw a publicly-owned insurance company as a means to solving those problems.
SGI: The Beginning
The Saskatchewan Government Insurance Office (SGIO) was legislated into existence in a special session of the Legislature on Nov. 10, 1944, by the CCF government. Provincial Treasurer C.M. Fines, the namesake of SGI’s current head office building, played a huge role in piloting the bill through the House and bringing the government’s idea to fruition.
In January 1945, the Premier assigned SGIO to the Honorable O.W. Valleau, Minister of Social Welfare. Valleau had worked on the committee that studied the possibility of government insurance and was a trusted friend and colleague to Fines.
Valleau chose the first General Manager, Michael Allore, from several applicants. Allore had about 15 years’ experience with one of the largest insurance companies in the country. The organization of the Saskatchewan Government Insurance Office officially began with the arrival of Allore from Toronto on March 10, 1945. Allore started with a yearly salary of $4,000.
Working out of the Legislative Building, Allore sold SGIO’s first policy – Fire Policy No. 1 – to Minister Valleau on May 1, 1945 and appointed the first broker, Oscar Sawby of Maple Creek, on May 17.
By the end of 1945, SGIO had 60 employees and numerous agents across the province, government insurance rates were 10 per cent lower than those of other companies, the $12,000 loan was paid back to the government and the company had accumulated a modest surplus.
SGIO moved into its first head office, the old Canada Life Assurance building, on the corner of 11th Avenue and Lorne Street in Regina in 1946.
In 1947, the Government Insurance Act was amended, effectively making SGIO a Crown corporation, complete with a Board of Directors chaired by the Minister. The Board replaced the Minister in the power structure and the operational boundaries of the company were also expanded to include any province in Canada.
North America’s First Compulsory Auto Insurance Program
Between 1936 and 1945, more than 15,000 people were killed on Canada’s highways, while two-thirds of the vehicles and vehicle owners in Canada were uninsured.
The idea of a compulsory auto insurance program surfaced around 1919 as a proposed way to ensure drivers would be properly compensated and protected in the event of an accident. However, it wasn’t until Saskatchewan introduced the Automobile Accident Insurance Act (AAIA) in 1946, that a compulsory auto insurance program existed in North America.
Being the first program of its kind, the AAIA was met with mixed reaction. Some called it the most advanced and humane insurance act ever produced, while others brushed it off as a complete folly. The government opposition and some of the public predicted failure for the plan.
Under the Act, all registered automobile owners in the province would be insured automatically upon the purchase of license plates. SGIO was empowered to administer the AAIA beginning April 1, 1946.
The AAIA operated and still operates on a self-sustaining, break-even basis. The premiums pay both the benefits and administrative expenses. Surpluses and deficits are recorded in a Rate Stabilization Reserve, which helps to stabilize the erratic effects of claims from year to year and ensures consistent, reasonable rates as well as improvements in service and coverage.
From inception, the AAIA fund has been administered separately from the corporation’s competitive insurance business and consistently offers Saskatchewan residents among the lowest auto insurance premiums in the country. Saskatchewan’s auto insurance rates were further lowered with the introduction of Safe Driver Recognition in 2002, a program that gives insurance discounts to people who drive safely.
In the past 60 years the AAIA has been amended several times. The last major time was in 2003 when Saskatchewan residents were offered a choice between No Fault and Tort auto injury insurance.
SGIO was the first general insurance organization in Canada to be unionized. In February 1946, SGI’s 31 non-management employees formed the Saskatchewan Insurance Employees Union Local #1, affiliated with the Canadian Congress of Labour.
Over a year later in August of 1947, employees voted to strike after negotiations between management and union executive broke down. Unionized employees were demanding a minimum wage of $90 per month. Shortly after the vote, union and management reached an agreement of $85 a month and avoided a strike.
In October 1948, SGIO management and Saskatchewan Insurance Employees Union leaders sat down to negotiate a new agreement, but negotiations broke off after two weeks of unsuccessful bargaining.
By this time there were 171 employees located in North Battleford, Saskatoon, Moose Jaw, Prince Albert, Yorkton, Swift Current and Regina head office. Management called the union’s wage proposals ridiculous and members voted to strike on Nov. 12, and on Nov. 17, approximately 140 employees walked out.
As the strike dragged on, controversy over union, management and government actions heightened. Fortunately, both sides patched up their differences and SGI’s first and only strike ended on Dec. 4 after 18 days.
On Feb. 1, 1962, the union transferred to the current Office and Professionals Employees Union (OPEIU).
Over the years, SGI’s union and management have worked together to implement programs such as employment equity, employee family assistance and long and short-term disability.
The first salvage plant opened in North Battleford in 1947 to dispose of damaged vehicles and sell the undamaged parts from wrecked vehicles to the auto body shops and the public.
The proceeds from salvage sales, then and now, go into the Auto Fund reserve to help offset the cost of claims and help stabilize compulsory auto insurance rates.
SGI Salvage has been a leader in the industry of vehicle recycling from the beginning. For example, in the late ‘70s, Salvage became the first auto recycler in Canada to recycle freon from air conditioners in total loss vehicles.
There are currently five salvage branches in Moose Jaw, North Battleford, Regina, Saskatoon and Yorkton.
A Growing Company
The growth of Saskatchewan’s government insurance operation was amazing. With operations beginning in 1945, SGIO became the largest general insurance company in the province after only four years.
By the end of its 10th year in operation, SGIO had assets totaling $10.8 million and had provided the provincial government with $2 million in dividends from its surplus. Employing 329 staff and working with over 600 brokers, SGIO was the 21st largest property casualty insurance company in Canada.
On SGIO’s 20th anniversary, the company reached an all-time high for premium income and number of policyholders. A year later in 1967, SGIO’s auto compulsory insurance, later named the Motor Vehicle Division and now known as the Auto Fund, earned a surplus of $2.6 million. With the surplus, the Rate Stabilization Reserve was created to help minimize the fluctuation of premium rates in years with excessive claims.
SGI continued its history of profitability and low insurance rates throughout the 1970s. In 1979, SGIO officially changed its name to SGI and on June 14th opened its new head office in downtown Regina. The C.M. Fines Building replaced the six locations that were being used throughout the city.
The corporation also continued to employ more people boasting over 1,100 staff by the end of the 70s.
The good financial times for the competitive side of the business continued into the early 1980s as brokers set a new sales record – breaking the $100 million mark for the first time in 1981.
Injury Claims and the Auto Fund
By the end of the 1970s, auto injury claim settlements began to spiral out of control damaging the Auto Fund financially.
Both costs and the number of claims were rising. To better protect motorists from these trends, SGI increased the liability coverage under the AAIA from $35,000 to $100,000 in 1981, and then to $200,000 in 1985.
“It was becoming apparent that something drastic had to be done. The urgency was accelerated with the general economic conditions, the trends in the courts for increasing awards and the devaluation of the Canadian dollar,” said former SGI President and legal advisor John Green. “A committee at SGI began looking at various alternative systems.”
In 1986, the cost of bodily injury claims rose dramatically due to legislative changes allowing husbands and wives to sue each other for damages and awarding interest payments on court awards before the settlement was decided.
Based on these changes and claims trends, SGI anticipated both the number and cost of bodily injury claims would continue to increase. To address these trends, SGI formed a bodily injury unit to specialize in these claims. However, the problem continued to escalate.
In 1987, there was a 32 percent increase in bodily injury and liability claims costs, contributing to the Auto Fund’s loss of $28.7 million, depleting the Rate Stabilization Reserve to $3.1 million.
By 1988, almost 40 per cent of every claims dollar was going to bodily injury liability claims.
In 1991, the courts doubled the maximum pain and suffering award for severe whiplash claims from $25,000 to $50,000. In 1992, SGI set up the Injury Study Advisory Board to look at ways to deal with the rising costs.
The skyrocketing cost of injury claims reached epidemic proportions in 1994. The Auto Fund suffered a $93.8 million loss, bringing the deficit in the Rate Stabilization Reserve to a bleak $108.9 million. Court awards for pain and suffering claims were soaring and SGI sought a remedy, other than a drastic rate increase.
Independent consultants, Sobeco, Ernst & Young, contracted by SGI to study compulsory insurance coverage and injury problems, recommended a no-fault system to deal with the rising court settlements.
SGI immediately got to work designing a no-fault system and The Personal Injury Protection Plan took effect Jan. 1, 1995. The plan set out specific benefits for those injured in an automobile accident. The plan helped curb rising injury claim payments, but also received criticism for taking away the ability to sue for pain and suffering.
Listening to those concerns, SGI introduced a choice in auto injury insurance in 2003; another first in North America. Today, all Saskatchewan residents can choose between a no-fault auto injury product and a court-based tort product.
Early in its history, the corporation began looking at expansion into other provinces. Not only would expansion serve to increase revenue, but it would also spread out the geographical risk.
However, SGIO’s early efforts at expansion proved fruitless as both the Alberta and Manitoba governments turned down SGI in 1949 because their insurance acts did not allow Crown corporations to operate in their provinces.
Expansion wasn’t seriously considered again until the early 1980s, when the Progressive Conservative (PC) government enacted legislation to separate the financial statements and operations of the Auto Fund and competitive business in 1984.
With hopes of privatizing the business side of SGI, the PC government attempted to split the two functions of the corporation by naming the compulsory auto insurance side of the business SaskAuto and renaming the competitive business side Saskatchewan General Insurance in 1988.
The government’s privatization plans came to a halt in April 1989, when the NDP opposition boycotted the Legislature for 17 days. The government’s plans were further stalled when the Court of Queen’s Bench struck down an Order-in-Council in August 1990, ruling that SGI couldn’t be privatized without Legislative approval. When the PC government was defeated by the NDP in the 1991 election, the privatization plans were abandoned.
SGI CANADA and SCISL
On Jan. 1, 1991, SGI’s competitive business operations began using the SGI CANADA name to help distinguish SGI’s two separate functions.
Under the NDP government, SGI began examining routes other than privatization to expand its competitive insurance business into other provinces. In 1992, the corporation created a subsidiary company called SGI CANADA Insurance Services Ltd. (SCISL).
SCISL received its license to sell property and casualty insurance in Manitoba in 1993, and sold its first policy there in September of that year. In 1995, SCISL set up an office in Winnipeg providing local service for brokers.
SGI CANADA would expand further in 2000 by becoming the majority shareholder in the Insurance Company of Prince Edward Island and purchasing the Ontario-based Coachman Insurance Company in 2001.
Traffic safety initiatives have always been a major focus for SGI. Raising awareness about important traffic safety issues has been shown to prevent accidents and in turn save lives and keep insurance rates down.
After an alarming upswing in vehicle accidents, the SGI traffic safety program began in 1948. The first initiative, The Safety Lane, traveled around the province inspecting vehicles’ safety equipment. The program proved to be extremely valuable and set the stage for many other initiatives in the years to come.
Programs such as “Lights on for Life,” “Always Plan a Safe Ride Home” and “Ding in the New Year” have made people more aware of traffic safety issues and thus contributed to a decrease in the severity of accidents and the number of fatalities.
SGI’s Vision and Values for the Future
Always with an eye to the future, SGI intends to build on its strong record by emphasizing the vision and values that have served as its foundation for the past 60 years.
As a Saskatchewan based insurance company we will set the industry standard for being highly valued by our customers.
Integrity: Conduction ourselves with honesty, trust and fairness
Caring: Acting with empathy, courtesy and respect
Innovation: Implementing creative solutions to achieve our vision
Since our beginning in 1945, SGI has been dedicated to the people of this province. We are a community-oriented business, run by Saskatchewan people for Saskatchewan people.
SGI currently employs more than 1,500 people and works with a network of more than 300 independent insurance brokers in Saskatchewan (and 450 motor license issuers, most of whom are brokers), as well as numerous brokers outside the province. The corporation operates 20 claims centres and five salvage operations in 13 Saskatchewan communities, and a SCISL branch office in Winnipeg, Manitoba.
Ministers of SGI
O.W. Valleau 1945 – 48
C.M. Fines 1948 – 60
A.E. Blakeney 1960 – 62
R.A. Walker 1962 – 64
A.H. McDonald 1964 – 65
Dave Boldt 1965 – 70
A.C. Cameron 1970 – 71
Roy Romanow 1971 – 74
Ed Whelan 1974 – 79
Wes Robbins 1979 – 83
Paul Rousseau 1983 – 84
Rick Folk 1985 – 86
Joan Duncan 1986 – 88
Graham Taylor 1988 – 89
Grant Schmidt 1989 – 91
Dwain Lingenfelter 1991 – 92
Keith Goulet 1992 – 95
Ed Tchorzewski 1995
Clay Serby 1995 – 1997
Dwain Lingenfelter 1997 – 2000
John Nilson 2000 – 2001
Maynard Sonntag 2001 – 2003
Deb Higgins 2003
Mark Wartman 2003 – 2004
Maynard Sonntag 2004
Presidents of SGI
Michael Allore 1945 – 53
Herbert Hammond 1953 – 65
Jim Dutton 1965 – 72
John Green 1973 – 80
Murray Wallace 1981 – 82
Don Black 1983 – 85
Alex Wilde 1985 – 91
Bill Heidt 1992 – 94
John Wright 1995 – 97
Larry Fogg 1997 – present
This story’s author requests anonymity.