SGI unable to pay dividend to Sask. government for first time in 12 years

Saskatchewan Government Insurance (SGI) Canada failed to distribute profits to the provincial government for the first time in more than a decade, in part due to the effects of "catastrophic weather events," according to the company's latest annual report.

The annual report does not make a specific link to climate change. But industry experts say insurance companies across Canada are experiencing similar effects from severe weather and have been working to adjust their business.

"There is no doubt, in the minds of the insurance industry CEOs across the country, that what we are seeing is being driven by climate change," said Craig Stewart, vice-president of climate change and federal issues for the Insurance Bureau of Canada, the national industry association.

"What you're experiencing in Saskatchewan is actually pretty standard for what's happening across the entire country."

SGI Canada, which is based in Saskatchewan but also operates in other provinces, made $24.4 million in profit in the 2022-23 fiscal year, driven mainly by investment earnings, the annual report says.

But the "modest financial performance" resulted in the Crown corporation not paying a dividend to the Saskatchewan government — the stakeholder — for the first time in 12 years, the report says.

SGI is unable to comment because of provincial byelection restrictions, a company spokesperson said. But Don Morgan, the minister responsible for all Crown corporations, said profits turned out to be better than originally predicted

SGI was expected to have lower profits in the last fiscal year because of industry challenges and higher administrative costs tied to a "major project to update business processes and technology," Morgan said in a statement sent through a government spokesperson.

The annual report listed frequent "catastrophic weather events," a high number of insurance claims and rising expenses caused by inflation, supply chain strains and labour issues as the main challenges SGI endured last year.

More people will likely file insurance claims as climate change creates the circumstances for harsher weather, said Stewart.

Supply chain issues and inflation have increased the cost of construction materials. The cost of labour has also increased, he noted. So if an insurance company has to replace a house that was destroyed in a storm, for example, the costs are higher.

Some companies, Stewart said, have started limiting their exposure to high-risk areas, such as places prone to flooding.

About 10 per cent of Canadians, especially in places like the Prairies and the lower mainland in B.C., cannot get insurance coverage because of flood risk, he said.

Public Safety Canada's disaster database only contains information on natural disasters through 2020. But the SGI annual report says 12 storms throughout Canada were deemed catastrophic events last year.