July 4, 2020

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Feud over online auto insurance will interest PUB

Hey there, time traveller!
This article was published 27/7/2019 (343 days ago), so information in it may no longer be current.

Forgotten in bitter conflict between Manitoba Public Insurance and private brokers over the future of online auto insurance is the fact that this fall, a potentially decisive trump card could be played in this ongoing war of attrition.

In October, a month after the provincial election, the Public Utilities Board will open hearings on the 2019 Autopac rate application. In those hearings, you can bet that the recent political furor over the future of online auto insurance services will be a major issue of contention.

MPI has already announced it is only seeking a 0.1 per cent increase for most vehicle owners in 2020. That is a virtual freeze, achievable thanks to an unexpected drop in the total cost of collision claims.

Even so, given all of the public quarreling that has taken place over the past few months, it seems likely the PUB will hear input from MPI and interveners on the future role of private insurance brokers when the hearings open.

Controversy erupted this past spring after the Free Press reported that Premier Brian Pallister and his PC government had pressured MPI to continue paying private brokers to deliver basic Autopac services despite estimates the Crown insurer could save hundreds of millions of dollars by moving to its own online portal.

The brokers benefit from a lucrative contract with MPI that pays them a minimum $80 million annually and also covers the entire cost of an existing online system used by brokers to complete things such as registration and licence renewals. As it reconsidered its relationship with brokers, MPI calculated that it could save more than $230 million over five years if it operated its own online portal.

Byron Williams, a lawyer with the Public Interest Law Centre who represents the Consumers Association of Canada at all PUB hearings on Autopac and Manitoba Hydro rate applications, said there are strong indications that the role of private brokers will form a major part of the rate hearings this fall.

"Our clients have not finalized our position on this issue," Williams said. "But this is directly relevant to the rate-setting process. It is clearly in play."

Neither Pallister nor his ministers have said definitively -- either orally or in writing -- that they prefer brokers to deliver online auto insurance services.

However, despite Pallister's frequent and strenuous assurances that there is nothing untoward going on, the dispute between MPI and brokers has proven to be a political minefield for the governing Tories.

Despite Pallister's frequent and strenuous assurances that there is nothing untoward going on, the dispute between MPI and brokers has proven to be a political minefield for the governing Tories.

Many of the opinion leaders within the Insurance Brokers Association of Manitoba (IBAM), the main lobby group for private insurance brokers, have deep connections to the Progressive Conservative party. Grant Wainikka, the IBAM's chief executive, spent more than five years as a senior political staffer in Premier Gary Filmon's Tory government in the 1990s, a period during which Pallister served as a MLA and cabinet minister.

And Pallister has been dogged by the unfortunate coincidence that among his private business interests, all of which are run day-to-day by partners while he is an elected public servant, he owns an insurance brokerage. He does not sell Autopac, but clearly has an affinity for the brokers who are trying to keep a hand in online insurance services.

It also didn't help that Crown Services Minister Colleen Mayer, who oversees MPI, was accused of accepting an illegal corporate donation from the IBAM, which appeared to have sponsored a hole at a September 2018 golf tournament used to raise money for Mayer's re-election campaign. If the donation was from the IBAM, it would be illegal under election financing laws.

Pallister had publicly encouraged MPI and the IBAM to resolve the conflict in a respectful manner. However, as evidence little progress was being made, Mayer this week issued a directive to MPI to seek a conciliator to hammer out a final agreement with brokers.

Mayer portrayed the directive as the best "path forward" in finding a resolution. However, in directing MPI and the brokers to use conciliation, Mayer is also confirming the Pallister government definitely wants brokers involved in online services. To what extent is unclear.

For Manitobans who just want to be assured they are getting the best deal possible from the Crown auto insurance monopoly, the PUB hearings can't come soon enough.

How could the PUB affect the outcome of the negotiations between IBAM and MPI? As the public regulator of MPI and Hydro, the PUB has a solemn responsibility to ensure that all aspects of a crown monopoly's business strategy are prudent and reasonable.

As it has shown in Hydro rate applications, the PUB is not afraid to disagree with basic financial decisions, and either order rates higher or lower than cited in the applications if they found a compelling reason.

If the PUB generates an opinion on the future of online Autopac services, particularly if it agrees with the MPI board that taking over most basic services through its own online portal is the best option, then the Pallister government will find itself severely hampered to continue protecting the interests of brokers.

If there is any saving grace for Tories, it is that both the conciliation process and the PUB hearings will push back any further developments on this story until after the provincial election.

Opposition parties will attempt to raise the spectre of political manipulation of Autopac — the NDP has already alleged Pallister wants to privatize MPI — in a bid to generate a voter backlash.

Regardless of how this plays out on the campaign trail, for Manitobans who just want to be assured they are getting the best deal possible from the Crown auto insurance monopoly, the PUB hearings can't come soon enough.


Dan Lett

Dan Lett

Born and raised in and around Toronto, Dan Lett came to Winnipeg in 1986, less than a year out of journalism school with a lifelong dream to be a newspaper reporter.

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