There are pitfalls for consumers if MPI were to create an online system for Autopac sales that bypasses insurance brokers, the Public Utilities Board was told.
Several insurance brokers testified Tuesday before the PUB, which is holding hearings on Manitoba Public Insurance's 2020 auto insurance rates.
They said their role has been unfairly portrayed in a negative light in recent news stories, and that the commissions they receive are low compared with what their counterparts receive in other provinces.
Brett McGregor, president of Guild Insurance Brokers, which operates six insurance outlets in southwestern Manitoba, said it would be "very scary for consumers" if they were to purchase auto insurance online without the aid of a broker.
"Manitobans don't understand the terms that MPI uses. We have to ask our questions in a way that explains the coverage to them." - Brett McGregor
Consumers often come to his door thinking they need just basic Autopac coverage when they really require more than that, he said.
For instance, clients who drive out of province or to the United States, where they can be sued for bodily injury, will need more than the basic $200,000 in third-party liability coverage.
"Manitobans don't understand the terms that MPI uses. We have to ask our questions in a way that explains the coverage to them," McGregor said.
The Insurance Brokers Association of Manitoba has said that its members are not opposed to MPI introducing online sales, but they feel that such transactions should go through an insurance broker.
McGregor, who employs 60 people, said after his appearance before the PUB that he would welcome online auto insurance sales.
He noted that he's already involved in online sales for other products, such as tenants' insurance. His experience, however, is that only 20 per cent of online sales are closed without a customer interacting in some way with staff.
He and other brokers believe that if MPI were to offer direct online auto insurance sales, bypassing brokers, somebody would still need to take the inevitable calls for information from customers. They worry that the business would simply move from their own firms to an MPI call centre, which would have to expand.
"I don't think there's an expense savings. I think there's an expense shift," said McGregor, who fears he would have to lay off staff and close some of his outlets if MPI were to sell a substantial percentage of its insurance directly to clients online.
Much has been made of the fact that brokers receive commissions on a policy in non-renewal years, but McGregor said it doesn't mean that there are no interactions with customers in those years. And, the income from these 'trailing commissions,' as they are known, make up for low fees or income deficiencies in other areas, he said.
"There's this idea that brokers are getting paid for no work. But when you look at our commission and fee schedule and you go down that list, you see all through it that there's give and take," McGregor said. "There are items that MPI gets a great deal on."
"I don't think there's an expense savings. I think there's an expense shift." - Brett McGregor
One of them, brokers say, is setting up a new customer, for which they are paid around $20, but which can take more than two hours of their time if that customer is from out of province or out of country and requires multiple visits.
"The big picture is we are providing the most efficient and cost-effective distribution model in the country," McGregor said.
Valerie Hutsal, with Dick Agencies Insurance Brokers in Brandon, said commissions aren't paid on many of the transactions brokers perform, such as setting up a monthly payment agreement with customers.
When MPI decided it no longer would accept monthly credit card payments for auto insurance, brokers needed to update clients' banking information. They weren't paid for that, she said.
"We received notifications every day for those clients," Hutsal said.
MPI has applied to the PUB for an overall rate reduction of 0.6 per cent for 2020. The board's ruling is expected late this year.
Larry Kusch didn’t know what he wanted to do with his life until he attended a high school newspaper editor’s workshop in Regina in the summer of 1969 and listened to a university student speak glowingly about the journalism program at Carleton University in Ottawa.