MPI seeks 3% rate hike

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This article was published 05/07/2024 (430 days ago), so information in it may no longer be current.

Manitoba Public Insurance has applied to increase overall vehicle insurance rates by three per cent — even though its own actuaries say more than double that is needed or the Crown corporation will be driven into the red.

A lawyer representing the Consumers’ Association of Canada says the proposed increase is higher than MPI says because its rate application to the Public Utilities Board also includes a $10 increase to the base driver premium. MPI currently charges every driver in Manitoba $45 annually for that.

“We’re really looking at closer to a four per cent rate change in terms of impact on consumers,” said lawyer Katrine Dilay of the Public Interest Law Corporation on Friday, shortly after MPI released its proposal to the PUB. “That’s important for customers to know.

“What’s interesting is MPI actuaries are telling MPI to go for a six per cent rate increase, but MPI, because they want to keep rates affordable, they are only asking for this three per cent increase. That’s really concerning for our clients because that’s not how insurance works … at the end of the day, MPI needs to recover its costs. So, our clients will be asking how is MPI going to make up that difference if they are only asking for three per cent, plus that $10 surcharge?

“We want to stress, our clients are concerned about affordability too, but not at the risk of creating significant risk for higher rate increases for future customers.”

In MPI’s general rate application, Cara Low, a fellow of the Canadian Institute of Actuaries, said after reviewing the data, “the indicated rate change, based on a zero per cent profit provision, was calculated to be 6.15 per cent in accordance with (Accepted Actuarial Practice) in Canada.”

Matt Wiebe, the minister responsible for MPI, said “we’ve been clear: our government’s priority has been about delivering on affordability and that extends to auto insurance rates in Manitoba.”

Wiebe said the MPI board delivered on affordability for Manitobans.

“Ultimately, this goes to the Public Utilities Board — we have a lot of respect for the work they do. They will take a look at all the various factors, but we want to keep rates affordable for Manitobans.

“If there is an increase, it is being done in a measured way and a way which continues to deliver on affordability.”

There was no mention of a higher rate increase being recommended by its actuaries in MPI’s news release.

“MPI’s focus remains on providing stable and affordable rates for Manitobans even as we face increasing financial pressures,” MPI CEO Satvir Jatana said in a statement. “We are taking necessary steps to manage these impacts, including seeking the lowest possible rate increase to ensure financial stability while continuing to deliver value for our customers.”

Later Friday, MPI spokeswoman Kristy Rydz said it will be updating the actuarial report closer to the PUB hearings in the fall.

“This is our best estimate of our future needs at this time,” Rydz said. “However, in general, when there is not enough revenue to cover costs, MPI will withdraw from its reserves. That’s why it’s important for MPI to maintain sufficient reserves.”

The Crown corporation said the proposed rate increase is necessary to address “a steady and prolonged rise in the cost of claims as well as the cost of labour, raw materials and technology.”

MPI’s total insurance expense for the year was $1.7 billion, an increase of $334 million, or 24 per cent, compared with the previous year.

The Crown corporation said last year’s Aug. 24 hailstorm in the Winnipeg area was the largest natural catastrophic event in MPI’s history. More than 15,000 hail-related claims were filed, with MPI saying those claims resulted in a $50-million impact to net income, creating significant backlogs and increasing the amount the corporation had to pay out in claims.

The average cost per claim has increased by more than $1,100 in the past year, MPI said. The corporation reported an overall net loss of $129.5 million in 2023-24, driven largely by the increase in incurred claims, it said.

“We will continue our focus on fiscal prudence, stability and affordability while providing outstanding products and services for Manitobans,” Jatana said.

Meanwhile, Dilay said clients are also concerned about the continued impact the troubled Project Nova may have on MPI’s ratepayers.

“MPI says they are anticipating spending $20 million more than what was projected last year, but they are still below their overall budget, including contingencies” as well as numbers showing Autopac is budgeting for an additional 374 full-time equivalent employees this year.

“Given the concerns expressed in the past, and because 374 is a pretty big number, we’ll certainly be digging into that number.”

The general rate application, if approved by the PUB, would take effect April 1. Because renewal dates are staggered, some vehicle owners wouldn’t pay the new rates until March 31, 2026.

kevin.rollason@freepress.mb.ca