Diverted funds a betrayal of MPI’s mandate

Manitoba drivers and vehicle owners have seen several insurance rate cuts and rebates in the last 18 months, the result of deep, pandemic-driven reductions in claims costs. But behind all that good news, there was a troublesome story brewing.

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Opinion

Hey there, time traveller!
This article was published 15/10/2021 (411 days ago), so information in it may no longer be current.

Manitoba drivers and vehicle owners have seen several insurance rate cuts and rebates in the last 18 months, the result of deep, pandemic-driven reductions in claims costs. But behind all that good news, there was a troublesome story brewing.

The Free Press recently revealed Crown-owned Manitoba Public Insurance was taking a $113-million slice off the top of excess Autopac revenues to fund non-insurance costs. It’s a decision that is wrong in many different ways.

MPI has a single, overarching mandate: to provide auto insurance to Manitobans at the lowest possible cost. Given its monopoly on basic auto insurance, MPI also has very strict rules to follow on what happens to its revenues.

MIKAELA MACKENZIE / WINNIPEG FREE PRESS The MPI head offices in downtown Winnipeg on Thursday, Oct. 7, 2021. For Dan Lett story. Winnipeg Free Press 2021.

Unfortunately, those rules appear to have largely been ignored by both current MPI management and the Progressive Conservative provincial government.

The $113-million diversion of funds comes from Autopac “extension” insurance — enhanced coverage Manitobans often attach to their basic policies. Two years ago, MPI reached an agreement with the Public Utilities Board to ensure all excess profits above capital reserve limits from Autopac’s “basic” and “extension” insurance lines would be cycled back into rate cuts and rebates.

MPI president and CEO Eric Herbelin, who took charge of the Crown insurer in early 2020, apparently had other ideas. He devised a plan to use some of the excess revenue from Autopac extension to solve another problem: rising costs at the driver and vehicle licensing (DVL) branch.

DVL is a government service delivered by MPI but paid for by driver and vehicle licensing fees. However, in recent years, government has not transferred enough money to MPI to cover DVL costs. In addition, DVL has been made to shoulder a $50-million share of the cost of a massive IT platform upgrade. And to make matters worse, the PC government has refused to fund the shortfall or technology upgrade.

So, it seems Mr. Herbelin decided to solve his DVL problem by taking some of the money dedicated to rebates and rate cuts. Although that action is questionable, the bigger concern is that neither he nor the Tory government told the general public what was going on until after the process had begun.

RUTH BONNEVILLE / WINNIPEG FREE PRESS FILES Crown Services Minister Jeff Wharton

The first $60 million of excess revenues were diverted in March of this year, apparently with the full knowledge of Crown Services Minister Jeff Wharton. However, neither MPI nor Mr. Wharton made any public disclosure. The only reveal came in late June, hidden within the fine print of a PUB rate application that few Manitobans would ever take the time to review.

Interveners will certainly ask the PUB to order MPI to return this money for rate cuts and rebates. If the PUB does indeed take that action, it should come with a strict warning to MPI officials to inform Manitobans in advance about any future plans that veer away from standard or regulated practice.

The failure to alert Manitobans to this plan, and the decision to proceed under cover of administrative darkness, is a violation of the principles of open, transparent and accountable government.

Many Autopac customers will see this as a story about lost rebates. However, the true cost of this skulduggery is a profound loss of trust in the integrity of basic operations of government. And that is something that cannot be restored by the PUB.

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