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Rubber hits the road

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Rubber hits the road

The Public Utilities Board has plenty to say about Manitoba Public Insurance -- not much of it is good. Besides halving MPI's request for an overall 1.8 per cent rate increase, the PUB spent considerable time cdriticizing the Crown auto insurer on other matters. That includes how it runs its investments, conducts road-safety programs and how it determines how much money should be socked away in its rate-stabilization fund. What the PUB said on:

  • Investment portfolio: It was worth $2.3 billion as of Feb. 28, 2013. MPI doesn't sit on its money, it invests in the markets, mostly in bonds and equities. By the end of 2014-15, MPI says it will have an investment portfolio of $2.4 billion by getting out of U.S. equities and putting more into long-term bonds. The problem is interest rates. A 0.5 per cent increase, or decrease, could see MPI earn, or lose, about $25 million either way in net income. The PUB has ordered MPI to have the composition of its investment portfolio reviewed by an external expert to see if the current asset mix should continue.
  • Rate-stabilization reserve: How much money MPI keeps to protect us from rate shock? For example, a huge hailstorm hits and everyone who didn't have a car in the garage needs a dent doctor. The PUB says MPI has retained earnings of more than $325 million. Is that too much? Should the reserve be capped at $172 million? Or at $100 million? And is MPI too conservative in squirreling away ratepayers' money for adverse scenarios that'll never happen? The PUB wants the government to direct MPI to give the PUB a strategy to deal with its excess retained earnings.
  • Road safety: Everybody agrees promoting safer driving is MPI's job. If more people drive more safely, slow down and use a seatbelt, MPI will see fewer claims and be able to keep rates down. But MPI has not reviewed the cost-benefit of its road-safety programs. The PUB wants MPI to get an independent review of those programs to see whether MPI is doing enough, and spending enough, to minimize the economic and social costs of collisions.

Republished from the Winnipeg Free Press print edition December 17, 2013 0

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