Note to MPI: losing not as badly doesn’t count as a win

It is getting harder to believe that Manitoba Public Insurance believes what it is saying.

Last week, MPI released its annual report for the year ending March 2025, confirming it had suffered a net loss on its operations of $19.7 million. This is an improvement over the $125 million it lost in the previous year, but still not an acceptable result for a Crown corporation that enjoys a monopoly on vehicle insurance.

Despite the fact MPI is still losing money, board chair Carmen Nedohin could only see the Autopac glass as half-full. “Through careful financial stewardship, that saw an increase in earnings over the previous year, and proactive risk management,” Nedohin said in a news release, “we have taken meaningful steps to safeguard MPI and protect the investments of Manitobans.”

The problem is that is not exactly what the annual report says about the MPI’s financial stewardship.

The report cited a long shopping list of concerns, including rising claims costs, global tariffs, inflation and “shifting political dynamics.” But MPI left out two major issues that reveal the board chair’s optimism as somewhat misplaced.

The first is the cost of operating MPI. For many years now, the Public Utilities Board — which reviews annual Autopac rate applications — and a host of interveners have raised concerns about the corporation’s administrative costs, which soared under the tenure of ousted CEO Eric Herbelin.

Before he was summarily dismissed in May 2023, Herbelin oversaw years of massive growth in overhead and head count, much of it connected to the ill-fated Project Nova technology overhaul. Herbelin paid millions to consultants and hired hundreds of new staff in a desperate bid to get Nova to the implementation finish line.

When Herbelin’s successor, Satvir Jatana, finally pulled the plug on Nova last March, MPI had spent more than $160 million without being able to deliver on even a fraction of the project’s goals.

One would have thought that with Herbelin gone and Nova written off, the board and senior management of MPI would move to impose strict cost controls. The Crown insurer’s latest numbers show that is not the case.

MPI spends more than 28 cents of every dollar it collects on administrative costs. That’s up significantly from the previous fiscal year, when the expense ratio was 23.2 per cent, and way out of whack with the 12-15 per cent that is considered a best practice in the private insurance industry.

That inability to control costs shows up in several important ways. This week, MPI is at the Public Utilities Board seeking a 2.07 per cent rate increase on top of a significant increase in deductibles for basic-level Autopac coverage that could add hundreds of dollars to the vehicle owner’s share of a claim.

Interveners at the PUB will argue this week — and with quite a bit of justification — that these additional costs could be erased with a healthy dose of cost control.

The other thing MPI did not mention in its 2024-2025 annual report — something that could definitely lower Autopac rates — is that it is still getting stiffed by government for the full cost of driver and vehicle licensing.

Although MPI runs driver and vehicle licensing, the province collects the roughly $200 million in fees. Government is supposed to transfer money back to MPI to cover the cost of offering the services, but over the last 20 years that rebate has fallen short of actual costs.

In 2024-2025, MPI lost nearly $30 million on Drivers and Vehicles Act operations, more than twice the $13.2 million it suffered the previous year. Even though government has the revenues to cover those losses, it has been left to Autopac ratepayers to make up the difference.

That is odd, because there was hope that when the NDP won the 2023 election, it would stop this unforgivable practice. And for good reason.

In a 2021 commentary published in the Free Press Community Review, Finance Minister Adrien Sala (then an opposition critic) lambasted the former Progressive Conservative government for using Autopac revenues to cover the shortfall in driver and vehicle licensing.

“Given the economic challenges Manitobans are facing right now,” Sala queried, “why does the PC government think it makes sense to take more money away from Manitobans?”

The question rings true, even today.

It’s fair to ask whether MPI is managing this part of its operations in an efficient way. And there is a possibility that the generous fees paid to private insurance agencies for performing some of the driver and vehicle licensing services are simply not sustainable.

Even so, the NDP essentially promised to end this practice when it was in opposition. It hasn’t happened.

Given its inability to effectively manage its own costs, and the government’s continued refusal to make MPI whole for driver and vehicle licensing, the optimism expressed by the corporation’s board in the news release accompanying the annual report is simply not justifiable.

At the PUB hearings this week, the MPI executive and board should be unveiling a plan to restore financial stability.

What they should not be doing is echoing that news release, which advanced the argument that performing less badly than the year before is even remotely equivalent to doing well.

dan.lett@winnipegfreepress.com