Hey there, time traveller!
This article was published 16/6/2014 (950 days ago), so information in it may no longer be current.
The coldest winter in 116 years is behind Manitoba Public Insurance asking the Public Utilities Board for an overall rate increase of 3.4 per cent.
In a release today MPI said last winter saw a record for collision claims and that, when combined with increases in claims costs, it has no choice but to ask the PUB to approve its request.
"More than half of our policy holders will see a rate increase of $20 or less per year or a decrease in their premium," Dan Guimond, president and CEO of Manitoba Public Insurance said. "Manitoba had a long winter with severe driving conditions, resulting in claims costs jumping 13.5 per cent."
Of the 3.4 per cent proposed increase, 2.4 per cent will be directed to basic insurance, while the remaining one per cent will be used to help replenish MPI’s Rate Stabilization Reserve Fund, which is used to help cover unexpected cost increases such as those from extreme weather events, Guimond said.
"It’s critical that we replenish the RSR to protect vehicle owners from significant rate increases driven by the next unexpected loss or weather event that would otherwise have to be covered by a significant rate increase," he said. "This allows MPI to keep rates stable over the long term."
MPI says the average passenger vehicle premium will be $949 if this application is approved.
Compared to last year, net claims incurred increased by $114.6 million. These higher than expected costs contribute to the increase to basic insurance rates.
"Over the last decade, collision costs have increased 35 per cent overall, while during the same period of time, the corporation has decreased its rates 14.9 per cent," Guimond said. "Despite these contrasting financial outcomes, the corporation was able to decrease, or keep rates flat, for nine of 10 years."
Additionally, external factors ─ the global economy, increasingly complex vehicle repairs, and general cost pressures from inflation – have also had an impact on this year’s rate proposal for basic insurance.
"It has been well documented just how challenging the past year has been in terms of collision claims and the costs associated with these claims," Guimond said. "The severe winter driving conditions experienced in the end of the 2013 winter and this past winter overall, along with greater severity of claims, has resulted in significantly higher claims costs."
Overall, a total of 168,000 collision claims were opened last year with MPI, compared to 160,000 the year previous. The average claim collision cost for 2013-14 was about $3,000, a 9.12 per cent increase over the previous year.
In the release, MPI also said if approved motorcyclists will see a 6.1 rate decrease or $61 per vehicle. If approved by the PUB, the average motorcycle rate will decrease to $939 from $1,000.
The decrease excludes mopeds and other small-engine displacement motor scooters.
If approved, the increase will take effect March 1, 2015. However, because of staggered renewals, some Manitobans will not start paying these rates until they renew their policy.
Typically, the PUB does not give what MPI wants carte blanche and if past board orders are any indication, autopac rates for the coming year could increase by about 1.5 per cent. The PUB will rule on the proposed rates this December.
MPI also filed its 2013 annual report with the legislature today.
It says its overall fiscal performance was affected positively by investment markets but negatively by increased net claims incurred costs, resulting in a net operating loss of $44.8 million. Despite inflationary increases, claims and operating expenses were $3.2 million or 1.3 per cent less than last year.
Last year, Manitobans filed an average of 1,151 claims daily, and the corporation paid out $2.6 million every working day. The average cost per claim was about $3,000.