MAnitoba Public Insurance's refusal to answer hundreds of queries about its operating expenses challenges the authority of the regulatory watchdog responsible for ensuring Autopac hikes are reasonable. MPI may prefer to test its chances against the Public Utilities Board's power in court, but that's an expensive, wasteful exercise. A compromise would be better, serving the interests of both parties.
Let's be clear, the PUB is entitled to review operations and expenditures at MPI. It has the right to make sure the rates charged for basic auto insurance, over which MPI holds a monopoly, are fair. At issue is a 3.4 per cent rate hike.
MPI's complaint is about the time and expense it is shouldering as PUB hearings get increasingly complicated by numerous intervenors, each with its specific agenda and interests. The PUB and other intervenors at the hearing, have asked almost 1,000 questions and these increased numbers appear to be a trend. For example, the number of questions MPI has been asked to answer doubled to 1,200 in a three-year period between 2010 and 2012. As an applicant, MPI must cover the hearing's cost, including the time spent by staff to prepare responses, and the cost of lawyers and witnesses at the hearing itself, which seems to be the reasoning for its decision to withhold its responses. Some of these questions can be described as fishing expeditions and a review of questions would help ensure intervenors don't waste an applicant's time. However, most are pertinent to the job of the PUB.
So far, MPI has agreed to answer some 550 questions. It has rebuffed about 400 requests from the PUB, the Consumers Association of Canada and others. An example? The demand from an auto-parts-recycling association that MPI describe the toxic contaminants produced when a vehicle is written off "and what effects these substances have in the environment and the health and safety of Manitobans who come into contact with same."
This provocative question is out of scope, designed to get MPI to construct the association's case that it is cheaper and wiser, environmentally, to use recycled parts where possible. But MPI rejected all queries from this group and that's what doesn't fit well with the issue of transparency and accountability. Recycled parts can defray expenses borne by ratepayers, yet MPI refused to answer the PUB's own query on how much the corporation paid for new versus aftermarket and recycled parts for the last decade.
MPI and the PUB have fought in court before over whether the regulator is overstepping its authority in demanding details on expenses. This has been done in an effort to make sure motorists are not shouldering unnecessary or unfair expenses. In 2011, the Court of Appeal said it couldn't settle the dispute on speculative information -- it needed hard evidence of where MPI has been asked for information irrelevant to basic rate setting.
MPI, now, has refused to provide an updated analysis that measures its expenses as a ratio of claims and premiums, and the personnel it assigns per claim. The analysis helps show whether the Crown corporation is improving its efficiency.
MPI will lose this fight which in essence is over whether it owes full disclosure of its operating expenses, revenues and how it affects rates. In the past, the PUB has ruled MPI overcharged ratepayers by socking away too much in a rate stabilization reserve, triggering successive years of rebates. It may object to making public some information, on its non-basic lines of insurance, because it competes with other providers for that business. The solution to that is an agreement allowing MPI to share that kind of information with PUB in confidence.
MPI's tack, however, gives reason for ratepayers to suspect it wants to obstruct reasonable scrutiny of its corporate finances and its efforts to keep operations efficient and costs down. MPI may be itching for a fight, but a court case will simply waste money and time. It can dismiss queries clearly beyond the hearing's scope, but it can't defend refusing to open its books to the PUB.