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Rate hike less than MPI sought

PUB orders auto insurer to look at staff, IT costs

Hey there, time traveller!
This article was published 16/12/2013 (1339 days ago), so information in it may no longer be current.

Autopac rates are going up for the first time since 2004, but not everybody will get dinged.

Manitoba Public Insurance will be allowed to increase its overall basic premiums and fees 0.9 per cent in 2014 -- half the increase it sought from the Public Utilities Board in June.

The cost of insuring a cab will increase by $300 or more in 2014. Basic insurance for a taxi in Winnipeg already tops $6,000 per year.


The cost of insuring a cab will increase by $300 or more in 2014. Basic insurance for a taxi in Winnipeg already tops $6,000 per year.

In its ruling Monday, the PUB said MPI should instead do more to control its spending.

The regulator said the corporation's operating and salary costs are increasing "well in excess of inflation." The PUB even went as far as to say that "it did not appear that cost control was a significant priority for the corporation."

Most vehicle owners will see little change in their basic insurance rates. In fact, basic premiums for 42.9 per cent of the more than one million vehicles in Manitoba will fall.

Rates for private passenger vehicles will rise an average of one per cent, while insurance costs for commercial vehicles will fall 1.6 per cent. Motorcycle owners will get a break on insurance, with costs dropping 6.1 per cent on average, and off-road vehicles will be 12.5 per cent less expensive to insure. Trailers, meanwhile, will cost 6.1 per cent more to license.

Worst hit on a sheer dollar basis will be taxi cab owners. The cost of insuring a cab will increase by $300 or more. Basic insurance for a taxi in Winnipeg already tops $6,000 per year.

"It's just not fair to our industry. This is just a blow that we can't afford right now," Unicity Taxi general manager Andrew Ross said, adding the industry hasn't been granted a fare hike in nearly four years.

Overall, public-class vehicles, which includes taxi cabs, limousines, school buses and transit buses, will be 3.9 per cent more expensive to insure in 2014.

The rate changes takes effect March 1.

MPI declined to comment on the PUB ruling other than to say it would review it. It said it requested a 1.8 per cent increase in overall rates due to increasing claim costs and uncertainty in investment markets.

In submissions to the Public Utilities Board earlier this year, the Canadian Automobile Association and the Consumers Association of Canada raised concerns about MPI's escalating operating costs. On Monday, both groups expressed satisfaction the insurer did not get what it wanted.

"It's sending a message to the corporation that cost control is an issue," the consumer association's Gloria Desorcy said of the ruling.

"Manitoba Public Insurance has a history of challenges with cost control," CAA spokeswoman Liz Peters said. "The smaller-than-requested increase is warranted, but we actually believe that no increase would have sent a stronger message."

MPI operating costs (charged to basic premiums) have grown at a compounded annual rate of 12.2 per cent since 2009, the PUB noted in its ruling. The regulator also expressed concerns over the corporation's IT spending, saying it remains high compared with that of similar organizations.

The PUB ordered MPI to report on "staffing and cost-control results" when it submits its next rate application next year. It also ordered it to file a five-year plan to justify current and future IT expenditures.

Meanwhile, the PUB ordered MPI to give more information on collisions involving motor vehicles and pedestrians and cyclists, and whether there is a pattern to them.

It also ordered an evaluation of MPI's high school driver education program. And it recommended the provincial government develop a road-safety strategy, using MPI as a research arm, given the wealth of information it has on collisions and claims.

Do you believe if MPI got a handle on its expenses, your insurance premiums would actually drop? Join the conversation in the comments below.

Read more by Larry Kusch.


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Updated on Tuesday, December 17, 2013 at 7:12 AM CST: Replaces photo, adds question for discussion, adds sidebar

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