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Winnipeg Free Press - PRINT EDITION
MPI death benefit crudely calculated
The payout by Manitoba Public Insurance to the family of a young mother killed by a drunk driver last September is a paltry sum, barely acknowledging the economic loss to her children and spouse. That's unfair because the adoption in 1994 of MPI's no-fault compensation scheme removed the right of Manitobans to sue those at fault for injury or death in motor vehicle accidents.
Samantha Schlichting's two toddlers will receive up to $50,000 each, to be put in trust; her spouse Landon Hay will receive less than $57,000, which won't come near the costs of child care over the years.
MPI insists that the death payment is not meant to mirror comparable awards in the tort system, but simply helps cushion losses. Yet the benefits MPI pays to those who are physically or mentally impaired in vehicle accidents roughly compare to awards made in civil suits.
When the Manitoba government in 1994 decided to replace the tort system with MPI's no-fault compensation, it removed the right of Manitobans to seek compensation that reflects the economic losses and for pain and suffering.
But unlike the compensation for impairment or catastrophic injury, MPI's payments for death and for income replacement, when someone is rendered unable to their work, are nominal compensation based on average industrial wage, with caps. The maximum annual income replacement payment is $85,000, whether you are a surgeon whose hand is crippled, or a truck driver who loses his vision. The highest one-time death payment is $427,000.
Manitobans have no choice but to buy auto insurance from MPI and many would find their rates compare well to those in other provinces, but the no-fault system's compensation scheme effectively means ratepayers benefit at others' expense. Ms. Schlichting's family's predicament is illustrative.
MPI has in the last decade rebated more than $600 million to ratepayers because reserves were flush -- amassed from premiums set too high and estimates of long-term personal injury payments that were far too conservative. The public corporation can afford to compensate families with payments that better reflect the actual economic burden when loved ones are injured or die in vehicle accidents.
The average industrial wage is a crude measure that ignores the breadth of income levels or the long-term economic value of a family member. Andrew Swan, minister responsible for MPI, should amend the MPI Act to adopt a better compensation scheme that better reflects economic losses.
Republished from the Winnipeg Free Press print edition February 6, 2013 A6
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