Insurance rebate for Manitoba drivers fine, but doesn't go far enough: consumers' group

Manitoba Public Insurance is steering the province's drivers toward a $335-million rebate, but a consumer advocacy group says drivers are still being shortchanged.

The public insurer should be barred from transferring $113 million in excess capital — money the association says must be returned to drivers — to cover the rising costs of driver and vehicle licensing, the Manitoba branch of the Consumers' Association of Canada argues.

The debate over MPI's excess revenues is looming over the insurer's application to offer its third rebate of the pandemic, along with a 1.2 per cent rate decrease in annual Autopac payments. The public hearing into MPI's requests began Tuesday at the Public Utilities Board.

Combining the effect of the proposed rebate and rate decrease, customers can expect a 26.1 per cent savings in their Autopac premiums compared with last year.

The Crown corporation has been able to pass savings on to drivers because the number of collisions has plummeted throughout the COVID-19 pandemic, when Manitobans were being urged to stay home and subsequently were off the roads.

Last year, MPI issued two rounds of rebates, totalling $110 million and $69 million. The average policyholder took home between $240 to $260.

Boost rebate: consumers' association

MPI is asking for a third rebate worth $335 million — the second largest in the insurer's history — though CAC, which advocates on behalf of policyholders, believes drivers are entitled to more.

The corporation has been told to use excess revenue to reduce rates or give rebates to drivers, but MPI sought to divert $113 million of that funding to cover driver and vehicle licensing and an IT system upgrade.

Without that diversion, the consumers' group says, MPI could offer an even higher rebate of approximately $665 per driver, adding the insurer is bolstering an area of business usually covered by the provincial government.

"That money really belongs to consumers. They paid it in good faith for insurance. It should not be used for something else, and it should also most definitely not be used to cover costs of government," Gloria Desorcy, CAC Manitoba's executive director, told CBC Manitoba's Up to Speed host Faith Fundal.

Desorcy says the consumers' group would make its case over the three-week PUB hearing. The board will have the final say on MPI's application. 

In a news release, MPI described transferring excess capital to cover some of its administration costs is in "full compliance with all applicable statutes and regulations."

On Tuesday, the corporation's new president, Eric Herbelin, told the PUB that diverting the money "was not only possible, but it was also the most fiscally prudent solution."

He lamented that MPI could not forecast the need for this funding last year, but said the corporation didn't have a choice. They had no other means to cover the shortfall.

"We did not make this decision lightly. I appreciate that you were not apprised of it ahead of time," Herbelin told the board, "and I also would like to assure you that all of our choices, including this one, are made in the best interests of Manitobans."

Herbelin says MPI is in discussions with the provincial government to find other sources of funding for this line of the business.

The auto insurer could not provide an estimate for the financial return for the average customer, but CAC estimates the insurer's proposed rebate will be worth $496 per policyholder.

If approved by the PUB, the rebate cheques would be issued sometime this winter.