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A chance for change at MPI

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With Manitoba Public Insurance's Marilyn McLaren having announced her intention to retire, the search for a new president will begin. Before determining the qualifications required, advertising the position and selecting the monopoly auto insurer's new leader, the NDP government should revise its approach to MPI.

The provincial government would better serve the interests of MPI's policyholders if it encouraged MPI to be much more transparent with its actions and its plans. At the annual public rate hearings before the Public Utilities Board, MPI should reveal information on all of its operations, anything less from an integrated operation such as MPI does not allow for the comprehensive review needed to ensure fair rates and efficient operations for a mandatory monopoly of the scale and importance of MPI.

As well, to attract someone with the experience, training and smarts to run a billion-dollar enterprise, the government needs to provide some distance between itself and MPI's board of directors and president. They have to be given more space for taking independent action, including the ability to float options, discuss problems and, if warranted, publicly disagree with the government. To create that space, MPI's board should be selected through an open competition, with industry experience and knowledge being important components of the selection criteria.

Over the years, MPI's sole shareholder, now represented by the NDP government, has grown accustomed to keeping its plans for MPI close to its vest and being the primary carrier of good news, leaving MPI to implement changes the government expects will be well-received. MPI has become less open and forthcoming at PUB hearings, and now acts as a subservient vassal to the politicians, providing and paying for services such as driver licensing that should be borne by government.

If the government doesn't change its approach, the track record suggests the new president will follow the now-ingrained behaviour, submitting to government's preference for opaqueness and silence. If good news is coming, even if it takes years to arrive (proper benefits for those catastrophically injured had to wait 17 years, while 24 years was required for a still-flawed drivers' discount and surcharge program), it will have to wait for government.

Under the present operating mode, fundamental changes to MPI's benefits and responsibilities come out of the blue, with little if any warning to the premium payers.

Major changes are announced as a fait accompli by government: Moving from the tort system (where injured parties may sue for damages) to a total no-fault system, where all injured are treated the same regardless of fault; the addition of retirement benefits for long-term claimants; the enhancement of benefits for the catastrophically injured; MPI being given the responsibility of administering the driver and vehicle licensing program; and, major changes to the responsibilities and commissions of MPI's brokers -- all these major changes came with little public consultation and without a comprehensive and public review of implications and options.

MPI has become a critical asset for the government, not only buying hundreds of millions of Province of Manitoba bonds and short-term debt but also paying for costs related to wider government purposes. MPI appears to be a department of government rather than a stand-alone Crown corporation.

MPI administers the government's driver and vehicle licensing program at a loss; uses vehicle owners' premiums to make charitable donations preferred by government; supports police and corrections functions; and meets long-haul truckers' injury costs while paying for truck driver training (incentives to keep the industry). All of this and more at the cost of passenger vehicle premiums, rather than coming from the government's general revenue.

So, with all this subsidizing going on how has MPI managed to meet the ever-rising costs of claims, pay a vastly expanded and well-compensated workforce, and expend significant money on the responsibilities of government, and still claim no premium increases in 14 of the last 15 years? In reality, the average premium has consistently increased over the years. The claim of no increases ignores the reality that, each year, old cars with low premiums drop off the rolls while new cars with much higher premiums join the fleet.

Is MPI efficient? Are all of MPI's costs justifiable? Could a better rate and benefit design be brought about? I suggest no, no and yes. And, don't look to the annual PUB's review of MPI's rates for answers: The regulator has been hamstrung by a restricted mandate that makes it more of a calculator than an unrestricted evaluator.

Regardless who is MPI's next president, unless the government changes its ways, major MPI decisions will remain with government. The day when policyholders are the focus of MPI lies in the future, and requires a less ideological and political shareholder. An opportunity to change is ahead, let us hope the government seizes it and returns the monopoly auto insurer to the public it was conceived to serve.

 

Graham Lane, a retired chartered accountant, was acting MPI president in 1988, and the chairman of the PUB from 2004 to 2012.

Republished from the Winnipeg Free Press print edition November 6, 2013 A9

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About Graham Lane

Graham Lane is a retired chartered accountant who worked in the public and private sectors for 50 years, concluding his career as chairman of the Manitoba Public Utilities Board.

He has also held key positions at Credit Union Central, Public Investments of Manitoba, the Manitoba Public Insurance Corp., the University of Winnipeg, and the Manitoba Worker's Compensation Board.

Before gaining his CA designation in Quebec, he was third in Canada in the then-national intermediate examination. He has a diploma in business administration from the University of Western Ontario and has served on numerous charitable and service boards.

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